10q10k10q10k.net

What changed in MICROCHIP TECHNOLOGY INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of MICROCHIP TECHNOLOGY INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+411 added−407 removedSource: 10-K (2025-05-23) vs 10-K (2024-05-23)

Top changes in MICROCHIP TECHNOLOGY INC's 2025 10-K

411 paragraphs added · 407 removed · 323 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+15 added−11 removed49 unchanged
Biggest changeMoorthy was elected to the Board of Directors of Celanese Corporation in December 2023 and serves on the Audit Committee and as the Nominating and Corporate Governance Committee Chairperson. Mr. Sanghi transitioned to Executive Chair in March 2021. He served as Chief Executive Officer from October 1991 to March 2021 and as Chair of the Board since October 1993.
Biggest changeHe previously served as Chief Executive Officer from October 1991 to March 2021, as Chair of the Board from October 1993 to March 2021 and August 2024 to November 2024, and as Executive Chair of the Board from March 2021 to August 2024, and from November 2024 to present.
To address these requirements, manufacturers often use integrated circuit-based embedded control systems that enable them to: • differentiate their products • replace less efficient electromechanical control devices • reduce the number of components in their system • add product functionality • reduce the system level energy consumption • make systems safer to operate • reduce the consumption of natural resources • add security to their products • decrease time to market for their products • significantly reduce product cost Embedded control systems have been incorporated into thousands of products and subassemblies in a wide variety of applications and markets worldwide, including: • actuators • applications requiring touch buttons, touch screens and graphical user interfaces • automotive access control • automotive comfort, safety, information and entertainment applications • avionics • communication infrastructure systems • consumer electronics • data center solutions • defense and military hardware • electric vehicles • handheld tools • home and building automation • industrial automation • large and small home appliances • medical devices 4 Table of Contents • motor controls • portable computers and accessories • power supplies • residential and commercial security systems • robotics • routers and video surveillance systems • satellites • smart home and IoT edge devices • smart meters and energy monitoring • storage and server systems • touch control • wireless communication Embedded control systems typically incorporate a mixed-signal microcontroller, microprocessor or FPGA as the principal active, and sometimes sole, component.
To address these requirements, manufacturers often use integrated circuit-based embedded control systems that enable them to: • differentiate their products • replace less efficient electromechanical control devices • reduce the number of components in their system • add product functionality • reduce the system level energy consumption • make systems safer to operate • reduce the consumption of natural resources • add security to their products • decrease time to market for their products • significantly reduce product cost Embedded control systems have been incorporated into thousands of products and subassemblies in a wide variety of applications and markets worldwide, including: • actuators • applications requiring touch buttons, touch screens and graphical user interfaces • automotive access control • automotive comfort, safety, information and entertainment applications • avionics • communication infrastructure systems • consumer electronics • data center solutions • defense and military hardware • electric vehicles • handheld tools • home and building automation • industrial automation 5 Table of Contents • large and small home appliances • medical devices • motor controls • portable computers and accessories • power supplies • residential and commercial security systems • robotics • routers and video surveillance systems • satellites • smart home, IoT and AI/ML edge devices • smart meters and energy monitoring • storage and server systems • touch control • wireless communication Embedded control systems typically incorporate a mixed-signal microcontroller, microprocessor or FPGA as the principal active, and sometimes sole, component.
We augment our internal manufacturing capabilities by outsourcing a significant portion of our wafer production requirements to third-party wafer foundries, including all of our 300mm wafer requirements and some of our 200mm and 150mm specialty process technologies. In fiscal 2024, approximately 64% of our sales came from products that were produced at outside wafer foundries.
We augment our internal manufacturing capabilities by outsourcing a significant portion of our wafer production requirements to third-party wafer foundries, including all of our 300mm wafer requirements and some of our 200mm and 150mm specialty process technologies. In fiscal 2025, approximately 64% of our sales came from products that were produced at outside wafer foundries.
The failure to obtain necessary licenses, the necessity of engaging in defensive legal proceedings, or any negative results of these proceedings could harm our business. 9 Table of Contents Environmental Regulation We must comply with many different federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of certain chemicals and gases used in our products and manufacturing processes.
The failure to obtain necessary licenses, the necessity of engaging in defensive legal proceedings, or any negative results of these proceedings could harm our business. Environmental Regulation We must comply with many different federal, state, local and foreign governmental regulations related to the use, storage, discharge and disposal of certain chemicals and gases used in our products and manufacturing processes.
We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such 8 Table of Contents countries as China and Taiwan. We are continuing to take actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis.
We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such countries as China and Taiwan. We are continuing to take actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis.
While select investments are still being made, in the fourth quarter of fiscal 2024, we paused most of our multi-year $800 million expansion and capital equipment investment plan at Fab 4. We plan to resume our expansion efforts to increase Fab 4's capacity as the business outlook improves.
While select investments are still being made, in the fourth quarter of fiscal 2024, we paused our multi-year $800 million expansion and capital equipment investment plan at Fab 4 through fiscal 2026. We plan to resume our expansion efforts to increase Fab 4's capacity as the business outlook improves.
By owning wafer fabrication facilities and our assembly and test operations, and by employing statistical techniques (such as statistical process control, designed experiments and wafer level monitoring), we have been able to achieve and maintain high production yields. Direct control over manufacturing resources allows us to shorten our design and production cycles.
By owning wafer fabrication facilities and our assembly and test operations, and by employing statistical techniques (such as 7 Table of Contents statistical process control, designed experiments and wafer level monitoring), we have been able to achieve and maintain high production yields. Direct control over manufacturing resources allows us to shorten our design and production cycles.
With the exception of Arrow Electronics, our largest distributor, which made up 12% and 11% of our net sales, in fiscal 2024 and in fiscal 2023, respectively, no distributor or direct customer accounted for more than 10% of our net sales.
With the exception of Arrow Electronics, our largest distributor, which made up 10% and 12% of our net sales, in fiscal 2025 and in fiscal 2024, respectively, no distributor or direct customer accounted for more than 10% of our net sales.
We generally seek to have multiple sources of supply for our raw materials and services, but, in some cases, we may rely on a single or limited number of suppliers. Sales and Distribution General We market and sell our products worldwide primarily through a network of direct sales personnel and distributors.
We generally seek to have multiple sources of supply for our raw materials and services, but, in some cases, we may rely on a single or limited number of suppliers. Sales and Distribution General We market and sell our products worldwide primarily through a network of direct sales personnel and distributors to approximately 109,000 unique customers.
Fab 5 currently manufactures discrete and specialty products in addition to a lower volume of a diversified set of standard products on 6-inch wafers.
Fab 5, located in Colorado Springs, Colorado, currently manufactures discrete and specialty products in addition to a lower volume of a diversified set of standard products on 6-inch wafers.
Generally, we do not have long-term agreements with our distributors and we, or our distributors, may terminate our relationships with each other with little or no advance notice, with the exception of orders placed under our Preferred Supply Program or otherwise designated as non-cancellable.
Generally, we do not have long-term agreements with our distributors and we, or our distributors, may terminate our relationships with each other with little or no advance notice, with the exception of orders otherwise designated as non-cancellable.
We target the 8-bit, 16-bit, and 32-bit mixed-signal microcontroller and 32-bit embedded mixed-signal microprocessor markets. We also offer specialized mixed-signal microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity and wireless connectivity applications.
We target the 8-bit, 16-bit, and 32-bit mixed-signal microcontroller and 32-bit embedded mixed-signal microprocessor markets. In July 2024, we entered the 64-bit mixed-signal microprocessor market. We also offer specialized mixed-signal microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity and wireless connectivity applications.
We currently compete principally on the basis of the technical innovation and performance of our embedded control products, including the following product characteristics: • performance • analog, digital and mixed-signal functionality and level of functional integration • field programmability • memory density • low power consumption • extended voltage ranges • reliability • security and functional safety • packaging alternatives • comprehensive suite of development tools We believe that other important competitive factors in the embedded control market include: • our broad product portfolio offers a Total System Solutions through a combination of hardware, software and services • ease of use • functionality of application development systems • hardware, software and tool compatibility within product families to increase migration flexibility • dependable delivery, quality and availability • technical and innovative service and support • time to market • total solution cost • reference design We believe that we compete favorably with other companies on all of these factors, but we may be unable to compete successfully in the future, which could harm our business.
We currently compete principally on the basis of the technical innovation and performance of our embedded control products, including the following product characteristics: • performance • analog, digital and mixed-signal functionality and level of functional integration • field programmability • memory density • low power consumption • extended voltage ranges • reliability • security and functional safety • packaging alternatives • comprehensive suite of development tools We believe that other important competitive factors in the embedded control market include: • our broad product portfolio offers a Total System Solutions through a combination of hardware, software and services • ease of use • functionality of application development systems • hardware, software and tool compatibility within product families to increase migration flexibility • dependable delivery, quality and availability • technical and innovative service and support • time to market • total solution cost • reference design We believe that we compete favorably with other companies on all of these factors, but if we are unable to compete successfully in the future, our business could be harmed. 10 Table of Contents Patents, Licenses and Trademarks We maintain a portfolio of U.S. and foreign patents, expiring on various dates from 2025 through 2044.
In each of fiscal 2024 and fiscal 2023, we derived 47% of our net sales through distributors compared to 53% of our net sales from customers serviced directly by us.
In fiscal 2025, we derived 45% of our net sales through distributors compared to 55% of our net sales from customers serviced directly by us. In fiscal 2024, we derived 47% of our net sales through distributors compared to 53% of our net sales from customers serviced directly by us.
In addition to the mixed-signal microcontroller, a complete embedded control system often incorporates application-specific software, various analog, mixed-signal, timing, connectivity, security and non-volatile memory components such as EEPROMs and Flash memory.
In addition to the mixed-signal microcontroller, a complete embedded control system often incorporates application-specific software, various analog, mixed-signal, timing, connectivity, security and non-volatile memory components such as EEPROMs and Flash memory. Mixed-signal microcontrollers are primarily available in 8-bit through 32-bit architectures.
Distribution Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers. We believe that distributors provide an effective means of reaching this broad and diverse customer base. We believe that customers recognize us for our products and brand name and use distributors as an effective supply channel.
We believe that distributors provide an effective means of reaching this broad and diverse customer base. We believe that customers recognize us for our products and brand name and use distributors as an effective supply channel.
Mixed-signal microcontrollers are primarily available in 8-bit through 32-bit architectures. 8-bit mixed-signal microcontrollers remain very cost-effective and easy to use for a wide range of high-volume embedded control applications and, as a result, continue to represent a significant portion of the overall mixed-signal microcontroller market. 16-bit and 32-bit mixed-signal microcontrollers provide higher performance and functionality, and are generally found in more complex embedded control applications.
In July 2024, we entered the 64-bit mixed-signal microprocessor market furthering our expansion beyond 32-bit architecture. 8-bit mixed-signal microcontrollers remain very cost-effective and easy to use for a wide range of high-volume embedded control applications and, as a result, continue to represent a significant portion of the overall mixed-signal microcontroller market. 16-bit and 32-bit mixed-signal microcontrollers provide higher performance and functionality, and are generally found in more complex embedded control applications.
Available Information Microchip Technology Incorporated was incorporated in Delaware in 1989. Our executive offices are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224-6199 and our telephone number is (480) 792-7200. Our Internet address is www.microchip.com.
Edward's University and a B.S. degree in Computer Technology from University of Southern Mississippi. Available Information Microchip Technology Incorporated was incorporated in Delaware in 1989. Our executive offices are located at 2355 West Chandler Boulevard, Chandler, Arizona 85224-6199 and our telephone number is (480) 792-7200. Our Internet address is www.microchip.com.
Bjornholt was promoted to Senior Vice President in 2019 and has served as Vice President of Finance since 2008 and as Chief Financial Officer since January 2009. He has served in various financial management capacities since he joined Microchip in 1995. Mr.
Simoncic was elected to the Board of Directors of Applied Industrial Technologies, Inc. in August 2024. Mr. Bjornholt was promoted to Senior Vice President in 2019 and has served as Vice President of Finance since 2008 and as Chief Financial Officer since January 2009. He has served in various financial management capacities since he joined Microchip in 1995. Mr.
We plan to resume our expansion efforts as the business outlook improves. We believe the combined capacity of Fab 2, Fab 4, and Fab 5 will allow us to respond to future demand for internally fabricated products with incremental capital expenditures.
We believe the closure of Fab 2 and the combined capacity of Fab 4 and Fab 5 will allow us to respond to future demand for internally fabricated products with incremental capital expenditures.
In order to respond to such requirements, we have historically maintained a significant work-in-process and finished goods inventory. Refer to Note 3 for a summary of our long-lived assets, consisting of property, plant and equipment and right-of-use assets, by geography. We have many suppliers of raw materials and subcontractors that provide our various materials and service needs.
Refer to Note 3 for a summary of our long-lived assets, consisting of property, plant and equipment and right-of-use assets, by geography. We have many suppliers of raw materials and subcontractors that provide our various materials and service needs.
Patents, Licenses and Trademarks We maintain a portfolio of U.S. and foreign patents, expiring on various dates from 2024 through 2043. We also have numerous additional U.S. and foreign patent applications pending. We do not expect that the expiration of any particular patent will have a material impact on our semiconductor business.
We also have numerous additional U.S. and foreign patent applications pending. We do not expect that the expiration of any particular patent will have a material impact on our semiconductor business.
Our culture is important to our employees, and is a key reason why we have a significant number of employees with long tenure with Microchip that have grown from individual contributors in the early stages of their careers into senior leadership positions today.
Our focus on communication aims to provide transparency among leadership, to promote trust among employees, and is a critical part of Microchip’s culture. 11 Table of Contents Our culture is important to our employees, and is a key reason why we have a significant number of employees with long tenure with Microchip that have grown from individual contributors in the early stages of their careers into senior leadership positions today.
Benefit programs include 401(k) programs in the U.S., and statutory pension programs outside the U.S. Microchip has multiple equity programs in place including restricted stock unit awards and employee stock purchase plans that align employee interests with those of our shareholders.
Microchip has multiple equity programs in place including restricted stock unit awards and employee stock purchase plans that align employee interests with those of our shareholders.
Bjornholt holds a Master's degree in Taxation from Arizona State University and a B.S. degree in Accounting from the University of Arizona. Mr. Drehobl was promoted to Senior Vice President in 2019 and has served as Vice President of the MCU8 business unit and various other divisions and business units since July 2001.
Bjornholt holds a Master's degree in Taxation from Arizona State University and a B.S. degree in Accounting from the University of Arizona. Mr. Bunker was promoted to Senior Vice President in 2019 and has served as Vice President of Backend Operations and other backend manufacturing divisions since May 2007.
In February 2023, we announced our plan to invest $880 million over the next several years to expand our silicon carbide (SiC) and silicon production capacity, including the production of 8-inch wafers, at our Fab 5 facility. While select investments are still being made, in the fourth quarter of fiscal 2024, we paused most of our expansion activity.
In February 2023, we announced our plan to invest $880 million over the next several years to expand our silicon carbide (SiC) and silicon production capacity, including the production of 8-inch wafers, at our Fab 5 facility.
We plan to continue to invest in assembly and test equipment to increase our internal capacity capabilities and transition certain outsourced assembly and test capacity to our internal facilities.
We use third-party assembly and test contractors for the balance of our assembly and test requirements. We plan to continue to invest in assembly and test equipment to increase our internal capacity capabilities and transition certain outsourced assembly and test capacity to our internal facilities.
Our synergistic product portfolio empowers disruptive growth trends, including 5G, data centers, sustainability, Internet of Things (IoT) and edge computing, advanced driver assist systems (ADAS) and autonomous driving, and electric vehicles, in key end markets such as automotive, aerospace and defense, communications, consumer appliances, data centers and computing, and industrial.
Our synergistic product portfolio empowers disruptive growth trends, including AI/ML, data centers, edge computing and Internet of Things (IoT), E-mobility, networking and connectivity, and sustainability in key end markets such as automotive, aerospace and defense, communications, consumer appliances, data centers and computing, and industrial.
Executive Officers of the Registrant The following sets forth certain information regarding our executive officers as of April 30, 2024: Name Age Position Ganesh Moorthy 64 President, Chief Executive Officer, and Director Steve Sanghi 68 Executive Chair Richard J. Simoncic 60 Chief Operating Officer J. Eric Bjornholt 53 Senior Vice President and Chief Financial Officer Stephen V.
Information About our Executive Officers The following sets forth certain information regarding our executive officers as of April 30, 2025: Name Age Position Steve Sanghi 69 Executive Chair of the Board, Chief Executive Officer and President Richard J. Simoncic 61 Chief Operating Officer J. Eric Bjornholt 54 Senior Vice President and Chief Financial Officer Mathew B.
Microprocessors integrate 32-bit (or above) central processing units (CPUs) with various high performance peripherals, such as communications and graphics, and execute code from external memory, typically dynamic random access memory.
Microprocessors integrate 32-bit (or above) central processing units (CPUs) with various high performance peripherals, such as communications and graphics, and execute code from external memory, typically dynamic random access memory. 64-bit microprocessors offer even greater computational power and are often utilized in applications requiring advanced processing capabilities, such as data-intensive tasks and sophisticated system operations such as Linux.
Assembly and Test We perform product assembly and test at various facilities located around the world. During fiscal 2024, we increased capacity and capabilities at our Thailand and Philippines facilities to support more technologies by making process improvements, upgrading existing equipment, and adding equipment.
During fiscal 2025, we increased capabilities at our Thailand and Philippines facilities to support more technologies by making process improvements, upgrading existing equipment, and adding equipment. During fiscal 2025, approximately 67% of both our assembly requirements and our test requirements were performed in internal facilities.
Analog Our analog product line consists of several families including power management, linear, mixed-signal, high voltage, thermal management, discrete diodes and MOSFETS, RF, drivers, safety, security, timing, USB, ethernet, wireless and other interface products. 5 Table of Contents We market and sell our analog product line into our mixed-signal microcontroller, microprocessor and FPGA customer base, and to customers who use mixed-signal microcontrollers and FPGA products from other suppliers and to customers who use other products that may not fit our traditional mixed-signal microcontroller, FPGA and memory products customer base.
We market and sell our analog product line into our mixed-signal microcontroller, microprocessor and FPGA customer base, and to customers who use mixed-signal microcontrollers and FPGA products from other suppliers and to customers who use other products that may not fit our traditional mixed-signal microcontroller, FPGA and memory products customer base.
The manufacture of integrated circuits, particularly non-volatile, erasable 7 Table of Contents complementary metal-oxide semiconductor (CMOS) memory and logic devices, such as those that we produce, are complex processes.
The manufacture of integrated circuits, particularly non-volatile, erasable complementary metal-oxide semiconductor (CMOS) memory and logic devices, such as those that we produce, are complex processes. These processes are sensitive to a wide variety of factors, including the level of contaminants in the manufacturing environment, impurities in the materials used and the performance of our manufacturing personnel and equipment.
We believe that our culture, values, and organizational development and training programs provide an inclusive work environment where our employees are empowered and engaged to deliver the best embedded control solutions to our customers.
Human Capital Resources Our Employees We invest in our highly-skilled global workforce of approximately 19,400 people in accordance with our Guiding Value: employees are our greatest strength. We believe that our culture, values, and organizational development and training programs provide a work environment where our employees are empowered and engaged to deliver the best embedded control solutions to our customers.
Compensation Programs We strive to provide competitive pay and benefits, that help meet the varying needs of our employees and encourage employees to be shareholders in Microchip through our various equity incentive plans. Our total compensation package includes base pay, broad-based stock grants and bonuses, healthcare and retirement plans, employee stock purchase plans, paid time off and family leave.
We offer tuition reimbursement programs to subsidize educational programs and advanced certifications. Compensation Programs We strive to provide competitive pay and benefits, that help meet the varying needs of our employees and encourage employees to be shareholders in Microchip through our various equity incentive plans.
Our licensing division has dedicated sales, technology, design, product, test and reliability personnel that support the requirements of our licensees. For information regarding our revenue, results of operations, and total assets for each of our last three fiscal years, refer to our financial statements included in this Form 10-K.
For information regarding our revenue, results of operations, and total assets for each of our last three fiscal years, refer to our financial statements included in this Form 10-K. 9 Table of Contents Distribution Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers.
We leverage our circuit design, process technologies, development tools, applications knowledge, and manufacturing experiences to enable our customers to implement various embedded control functions in their end systems with our mixed-signal microcontrollers.
We leverage our circuit design, process technologies, development tools, applications knowledge, and manufacturing experiences to enable our customers to implement various embedded control functions in their end systems with our mixed-signal microcontrollers. 6 Table of Contents Analog Our analog product line consists of several families including power management, linear, mixed-signal, high voltage, thermal management, discrete diodes and MOSFETS, RF, drivers, safety, security, timing, USB, ethernet, wireless and other interface products.
We currently plan to continue to operate these fabrication facilities with modest investment to keep them operational. We continue to transition products to more advanced process technologies to reduce future manufacturing costs. We believe that our ability to successfully transition to more advanced process technologies is important for us to remain competitive.
We continue to transition products to more advanced process technologies to reduce future manufacturing costs. We believe that our ability to successfully transition to more advanced process technologies is important for us to remain competitive. In fiscal 2025, approximately 36% of our sales came from products produced at our own wafer fabrication facilities that are located in the U.S.
Our operating results will suffer if we are unable to maintain yields at or above approximately the current levels. Historically, we have relied on our ability to respond quickly to customer orders as part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules.
Historically, we have relied on our ability to respond quickly to customer orders as part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules. In order to respond to such requirements, we have historically maintained a significant work-in-process and finished goods inventory.
Item 1. Business Overview We develop, manufacture and sell smart, connected and secure embedded control solutions used by our customers for a wide variety of applications. With over 30 years of technology leadership, our broad product portfolio offers a Total System Solution (TSS) for our customers that can provide a large portion of the silicon requirements in their applications.
In July 2024, we entered the 64-bit mixed-signal microprocessor market furthering our expansion beyond 32-bit architecture. With over 35 years of technology leadership, our broad product portfolio offers a Total System Solution (TSS) for our customers that can provide a large portion of the silicon requirements in their applications.
In light of the current macroeconomic environment, we have paused capacity expansion while continuing new technology implementation in all three facilities. As a result of our prior acquisition activity, we acquired several smaller wafer fabrication facilities, which utilize older technologies that are appropriate for the discrete products they manufacture.
As a result of our prior acquisition activity, we acquired several smaller wafer fabrication facilities, which utilize older technologies that are appropriate for the discrete products they manufacture. We currently plan to continue to operate these fabrication facilities with modest investment to keep them operational and accommodate areas of growing demand.
This control also allows us to capture a portion of the wafer manufacturing and assembly and testing profit margin.
This control also allows us to capture a portion of the wafer manufacturing and assembly and testing profit margin. We outsource a significant portion of our manufacturing requirements to third parties. We comply with several quality systems, including: ISO9001 (2015 version), IATF16949 (2016 version), AS9100 (2016 version), and TL9000. Refer to "Item 2.
He has been employed by Microchip since August 1989 and 11 Table of Contents has served as a Vice President in various roles since February 1997. Mr. Drehobl holds a Bachelor of Technology degree from the University of Dayton. In April 2024, Mr. Drehobl notified us of his decision to retire from Microchip effective June 7, 2024.
He has been employed by Microchip since February 1993 and has served as a Vice President in various roles since May 2007. Mr. Bunker holds a Master's degree in Technology Management from University of Phoenix and a B.S. degree in Electrical Engineering from Arizona State University. Mr.
These processes are sensitive to a wide variety of factors, including the level of contaminants in the manufacturing environment, impurities in the materials used and the performance of our manufacturing personnel and equipment. As is typical in the semiconductor industry, we have from time to time experienced lower than anticipated manufacturing yields.
As is typical in the semiconductor industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at or above approximately the current levels.
Removed
We outsource a significant portion of our manufacturing requirements to third parties and the amount of our outsourced manufacturing has increased in recent years due to our acquisitions of companies that outsourced all or substantial portions 6 Table of Contents of their manufacturing.
Added
Item 1. Business Overview We develop, manufacture and sell smart, connected and secure embedded control solutions used by our customers for a wide variety of applications. Our strategic focus includes general purpose and specialized 8-bit, 16-bit, and 32-bit mixed-signal microcontroller, microprocessors, analog, FPGA, and memory products.
Removed
We comply with several quality systems, including: ISO9001 (2015 version), IATF16949 (2016 version), AS9100 (2016 version), and TL9000. Refer to "Item 2. Properties" for further information regarding the location and principal operations of our manufacturing facilities. Wafer Fabrication Fab 2 currently produces 8-inch wafers and supports various manufacturing process technologies, and predominantly utilizes our 0.25 microns to 1.0 microns processes.
Added
Properties" for further information regarding the location and principal operations of our manufacturing facilities. Wafer Fabrication On March 3, 2025, we announced the closure of our Fab 2 manufacturing operations. The Fab 2 closure was completed in May 2025 and the Fab 2 facility and equipment are currently available for sale.
Removed
During fiscal 2024, we reduced wafer starts in Fab 2 to decrease production to be more in line with demand for our products. Fab 2 continues to add additional process technologies, implement process improvements, upgrade existing equipment, and add equipment to support future demand. Fab 4 currently produces 8-inch wafers using predominantly 0.13 microns to 0.5 microns manufacturing processes.
Added
With our inventory levels being high and having ample capacity in place, we announced our decision to close Fab 2, which we expect will generate annual cash savings of approximately $90 million.
Removed
During fiscal 2024, approximately 59% of our assembly requirements were being performed in our internal facilities and approximately 71% of our test requirements were performed in internal facilities. We use third-party assembly and test contractors for the balance of our assembly and test requirements.
Added
All of the process technologies will be transferred from Fab 2 to Fab 4 and Fab 5 factories and many such technologies are already running in Fab 4 and Fab 5, both of which have ample clean room space for expansion. Fab 4, located in Gresham, Oregon, currently produces 8-inch wafers using predominantly 0.13 microns to 0.5 microns manufacturing processes.
Removed
Human Capital Resources Our Employees We invest in our highly-skilled global workforce of approximately 22,300 people in accordance with our Guiding Value: employees are our greatest strength.
Added
While select investments are still being made to reorganize our manufacturing capacity, in the fourth quarter of fiscal 2024, we paused our expansion activity through fiscal 2026. We plan to resume our expansion efforts as the business outlook improves.
Removed
Our focus on communication aims to provide transparency among leadership, to promote trust among employees, and is a critical part of Microchip’s culture.
Added
Consistent with the macroeconomic environment during fiscal 2025, our capacity expansion activity at Fab 4 and Fab 5 remained paused and we have reduced our planned capital investments through fiscal 2026.
Removed
We offer tuition reimbursement programs to 10 Table of Contents subsidize educational programs and advanced certifications. We have an employee resource group for women and one for employees from traditionally underrepresented groups in order to support readiness for future advancement.
Added
In addition to the Fab 2 closure, which commenced in the fourth quarter of fiscal 2025, we reduced headcount at Fab 4, Fab 5 and our backend manufacturing facility in the Philippines.
Removed
Drehobl 62 Senior Vice President, MCU8 and MCU16 Business Units Mr. Moorthy was appointed as Chief Executive Officer in March 2021 and to the Board of Directors in January 2021. Mr. Moorthy has served as President since February 2016 and Chief Operating Officer since June 2009.
Added
We expect approximately $90 million in annual savings related to the closure of Fab 2, plus approximately $25 million in annual savings from the temporarily reduced compensation costs in Fab 4 and Fab 5.
Removed
He also served as Executive Vice President from October 2006 to August 2012 and as a Vice President in various roles since he joined Microchip in 2001. Prior to this time, he served in various executive capacities with other semiconductor companies. Mr.
Added
There are benefits to having our own U.S. wafer fabrication facilities such as increased IP protection and security, increased supply chain resilience and the ability to manage production costs.
Removed
Moorthy holds an M.B.A. in Marketing from National University, a B.S. degree in Electrical Engineering from the University of Washington and a B.S. degree in Physics from the University of Mumbai, India. Mr.
Added
Diversifying our wafer production geographically can help prevent disruptions that may be caused by geopolitical tensions, tariffs or natural disasters. 8 Table of Contents Assembly and Test We perform product assembly and test at various facilities located around the world.
Removed
Moorthy served on the Board of Directors of Rogers Corporation from July 2013 to January 2024 and also served on the Audit Committee of the Board and as the Nominating, Governance and Sustainability Committee Chairperson. Mr.
Added
Our licensing division has dedicated sales, technology, design, product, test and reliability personnel that support the requirements of our licensees.
Added
Our total compensation package includes base pay, broad-based stock grants and bonuses, healthcare and retirement plans, employee stock purchase plans, paid time off and family leave. Benefit programs include 401(k) programs in the U.S., and statutory pension programs outside the U.S.
Added
Bunker 55 Senior Vice President, Operations Joseph R. Krawczyk II 65 Senior Vice President, Worldwide Client Engagement Mr. Sanghi was appointed as Executive Chair of the Board, Chief Executive Officer and President in November 2024.
Added
Mr. Sanghi was elected to the Board of Directors of Intel Corporation in December 2024. 12 Table of Contents Mr.
Added
Krawczyk was promoted to Senior Vice President in 2022 and has served as Vice President of WW Client Engagement since May 2021. He served as Vice President of Asia Client Engagement from 2006 to 2020. Since joining Microchip in September 1995, Mr. Krawczyk held various marketing and geographical sales roles. Mr. Krawczyk holds a Master's degree in Business from St.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

167 edited+41 added−46 removed225 unchanged
Biggest changeSome of the factors that may affect our operating results include: • general economic, industry, public health or political conditions in the U.S. or internationally, including uncertain economic conditions in U.S., China and Europe, increases in interest rates, high inflation or instability in the banking sector; • the level of order cancellations or push-outs due to uncertain economic conditions or other factors; • disruptions in our business, our supply chain or our customers' businesses due to public health concerns (including viral outbreaks and pandemics), cybersecurity incidents, terrorist activity, armed conflict, war (including military conflict in the Middle East and Russia's invasion of Ukraine), worldwide oil prices and supply, fires, natural disasters or disruptions in the transportation system; • changes in demand or market acceptance of our products and products of our customers, and market fluctuations in the industries into which such products are sold; • levels of inventories held by our customers and the customers of our distributors; • availability of raw materials including rare earth minerals, supplies and equipment due to supply chain constraints or other factors; • constrained availability from other electronic suppliers impacting our customers' ability to ship their products, which in turn may adversely impact our sales to those customers; • our ability to continue to increase our factory capacity as needed to respond to changes in customer demand; • our ability to secure sufficient wafer foundry, assembly and testing capacity; 13 Table of Contents • trade restrictions and increase in tariffs, including those on business in China, or focused on specific companies; • increased costs and availability of raw materials, supplies, equipment, utilities, labor, and/or subcontracted services for wafers, assembly and test; • the mix of inventory we hold and our ability to satisfy orders from our inventory; • changes in utilization of our manufacturing capacity and fluctuations in manufacturing yields; • changes or fluctuations in customer order patterns and seasonality; • changes in tax regulations in countries in which we do business; • new accounting pronouncements or changes in existing accounting standards and practices; • risk of excess and obsolete inventories; • competitive developments including pricing pressures; • unauthorized copying of our products resulting in pricing pressure and loss of sales; • our ability to successfully transition to more advanced process technologies to reduce manufacturing costs; • the level of orders that are received and can be shipped in a quarter, including the impact of product lead times; • the level of sell-through of our products through distribution or resale; • our ability to realize the expected benefits of our past or future acquisitions; • fluctuations in our mix of product sales; • announcements of other significant acquisitions by us or our competitors; • costs and outcomes of any current or future tax audits or any litigation, investigation or claims involving intellectual property, our acquisitions, customers or other issues; and • property damage or other losses, whether or not covered by insurance.
Biggest changeSome of the factors that may affect our operating results include: • general economic, industry, public health or political conditions in the U.S. or internationally, including uncertain economic conditions in U.S., China and Europe, changes in tariffs, interest rates, persistent inflation or instability in the banking sector; • trade restrictions and increase in tariffs, including those on business in China, or focused on specific companies; • the level of order cancellations or push-outs due to uncertain economic conditions or other factors; • levels of inventories held by our customers and the customers of our distributors; • the mix of inventory we hold and our ability to satisfy orders from our inventory; • the level of orders that are received and can be shipped in a quarter, including the impact of product lead times; • disruptions in our business, our supply chain or our customers' businesses due to public health concerns (including viral outbreaks and pandemics), cybersecurity incidents, terrorist activity, armed conflict, war (including military conflict in the Middle East and Russia's invasion of Ukraine), worldwide oil prices and supply, fires, natural disasters or disruptions in the transportation system; • changes in demand or market acceptance of our products and products of our customers, and market fluctuations in the industries into which such products are sold; • availability of raw materials including rare earth minerals, supplies and equipment due to supply chain constraints, disruptions in transportation systems, trade restrictions, or other factors; • constrained availability from other electronic suppliers or disruptions in transit systems impacting our customers' ability to ship their products, which in turn may adversely impact our sales to those customers; • our ability to continue to increase our factory capacity as needed to respond to changes in customer demand; • our ability to secure sufficient wafer foundry, assembly and testing capacity; • increased costs and availability of raw materials, supplies, equipment, utilities, labor, and/or subcontracted services for wafers, assembly and test; • changes in utilization of our manufacturing capacity and fluctuations in manufacturing yields; • changes or fluctuations in customer order patterns and seasonality; • changes in tax regulations in countries in which we do business; • new accounting pronouncements or changes in existing accounting standards and practices; • risk of excess and obsolete inventories; • competitive developments including pricing pressures; • unauthorized copying of our products resulting in pricing pressure and loss of sales; • our ability to successfully transition to more advanced process technologies to reduce manufacturing costs; • the level of sell-through of our products through distribution or resale; • our ability to realize the expected benefits of our past or future acquisitions; • fluctuations in our mix of product sales; • announcements of other significant acquisitions by us or our competitors; • costs and outcomes of any current or future tax audits or any litigation, investigation or claims involving intellectual property, our acquisitions, customers or other issues; and • property damage or other losses, whether or not covered by insurance.
However, our system improvements have not been fully effective in preventing attacks on our IT systems and data, including breaches of our security measures, and there can be no assurance that any future system improvements will be effective in preventing future cyber-attacks or disruptions, a ransom-style attack, or limiting the damage from any future cyber-attacks or disruptions.
However, our system improvements have not been fully effective in preventing attacks on our IT systems and data, including breaches of our security measures, and there can be no assurance that any future system improvements will be effective in preventing cyber-attacks or disruptions, a ransom-style attack, or limiting the damage from any cyber-attacks or disruptions.
Operations at any of our facilities, at the facilities of any of our wafer fabrication or assembly and test subcontractors, or at any of our significant vendors, licensees or customers may be disrupted due to public health concerns (including outbreaks such as COVID-19), work stoppages or reduction in available labor, power loss, insufficient water, cyber-attacks, computer network compromises, incidents of terrorism or security risk, political instability, governmental actions, telecommunications, transportation or other infrastructure failure, radioactive contamination, adverse changes in climate, or fires, earthquakes, floods, droughts, volcanic eruptions or other natural disasters.
Operations at any of our facilities, at the facilities of any of our wafer fabrication or assembly and test subcontractors, or at any of our significant vendors, licensees or customers may be disrupted due to public health concerns (including outbreaks such as COVID-19), work stoppages or reduction in available labor, power loss, insufficient water, cyber-attacks, computer network compromises, incidents of terrorism or security risk, tariffs, political instability, governmental actions, telecommunications, transportation or other infrastructure failure, radioactive contamination, adverse changes in climate, or fires, earthquakes, floods, droughts, volcanic eruptions or other natural disasters.
These and any other laws relating to privacy or data protection and their interpretations continue to develop and their uncertainty and inconsistency may increase the cost of compliance, cause compliance challenges, restrict our ability to offer products in certain locations in the same way that we have been, and potentially adversely affect certain third-party service providers.
These and any other laws relating to privacy or data protection and handling and their interpretations continue to develop and their uncertainty and inconsistency may increase the cost of compliance, cause compliance challenges, restrict our ability to offer products in certain locations in the same way that we have been, and potentially adversely affect certain third-party service providers.
Risks Related to Taxation, Laws and Regulations • impact on our reported financial results by new accounting pronouncements or changes in existing accounting standards and practices; • the issuance of new export controls or trade sanctions, fines, restrictions or delays in our ability to export or import products, or increase costs associated with the manufacture or transfer of products; • outcome of future examinations of our income tax returns; • exposure to greater than anticipated income tax liabilities, changes in or the interpretation of tax rules and regulations or unfavorable assessments from tax audits; • impact of the legislative and policy changes implemented globally by the current or future administrations; • impact of stringent environmental, climate change, conflict-free minerals and other regulations or customer demands; • failure to meet ESG expectations, standards or disclosure requirements; • impact regarding the responsible use of our technologies; and • requirement to fund our foreign pension plans.
Risks Related to Taxation, Laws and Regulations • impact on our reported financial results by new accounting pronouncements or changes in existing accounting standards and practices; • the issuance of new export controls or trade sanctions, tariffs or other trade barriers, fines, restrictions or delays in our ability to export or import products, or increase costs associated with the manufacture or transfer of products; • outcome of future examinations of our income tax returns; • exposure to greater than anticipated income tax liabilities, changes in or the interpretation of tax rules and regulations or unfavorable assessments from tax audits; • impact of the legislative and policy changes implemented globally by the current or future administrations; • impact of stringent environmental, climate change, conflict-free minerals and other regulations or customer demands; • failure to meet ESG expectations, standards or disclosure requirements; • impact regarding the responsible use of our technologies; and • requirement to fund our foreign pension plans.
An interruption of any materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business. The supplies necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases, or due to supply chain disruptions, trade restrictions or political instability.
An interruption of any materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business. The supplies necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases, or due to supply chain disruptions, transit disruptions, trade restrictions or political instability.
Our future operating results could suffer if a significant contractor were to experience production difficulties, insufficient capacity, decreased manufacturing, reduced availability of labor, assembly and test yields, or increased costs due to disruptions such as political upheaval, infrastructure disruption or pandemics.
Our future operating results could suffer if a significant contractor were to experience production difficulties, insufficient capacity, decreased manufacturing, reduced availability of labor, assembly and test yields, or increased costs due to disruptions such as political upheaval, transit disruptions, infrastructure disruption or pandemics.
The ultimate outcome of disputes of this nature is uncertain, and if the IRS and IRB were to prevail on their assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
The ultimate outcome of disputes of this nature is uncertain, and if the IRS, IRB, and GTA were to prevail on their assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
For example, in the fourth quarter of fiscal 2023 and in fiscal 2024, we have accommodated requests by customers to push-out certain orders to help them manage inventory levels and, in some cases, to help other customers that are experiencing supply shortages.
For example, in the fourth quarter of fiscal 2023, in fiscal 2024 and in fiscal 2025, we have accommodated requests by customers to push-out certain orders to help them manage inventory levels and, in some cases, to help other customers that are experiencing supply shortages.
Further, any actual or alleged failure by us or our service providers to comply with laws, regulations, or other actual or asserted obligations relating to privacy, data protection, or cybersecurity may subject us to claims, demands, and litigation, sanctions or fines by regulators, and other damages and liabilities.
Further, any actual or alleged failure by us or our service providers to comply with laws, regulations, or other actual or asserted obligations relating to privacy, data protection and handling, or cybersecurity may subject us to claims, demands, and litigation, sanctions or fines by regulators, and other damages and liabilities.
For example, in the fourth quarter of fiscal 2023 and in fiscal 2024, we accommodated requests by customers to push-out certain orders to help them manage inventory levels and, in some cases, to help other customers that are experiencing supply shortages.
For example, in the fourth quarter of fiscal 2023, in fiscal 2024 and in fiscal 2025, we accommodated requests by customers to push-out certain orders to help them manage inventory levels and, in some cases, to help other customers that are experiencing supply shortages.
A strong position in the Chinese market is a key component of our global growth strategy. Although our sales in the Chinese market were very strong in calendar 2021, competition in China is intense, and China's economic growth slowed in calendar 2022 and through the first half of calendar 2023.
Having a strong position in the Chinese market is a key component of our global growth strategy. Although our sales in the Chinese market were very strong in calendar 2021, competition in China is intense, and China's economic growth slowed in calendar 2022 and through the first half of calendar 2023.
The success of our new product introductions depends on various factors, including, but not limited to: • effective new product selection; • timely completion and introduction of new product designs; • availability of skilled employees; • procurement of licenses for intellectual property rights from third parties under commercially reasonable terms, including those that may be needed to offer interoperability between our products and third-party products; • implementation of appropriate technical standards developed by standard setting organizations; • timely filing and protection of intellectual property rights for new product designs; • availability of development and support tools and collateral literature that make complex new products easy for engineers to understand and use; and 20 Table of Contents • market acceptance of our customers' end products.
The success of our new product introductions depends on various factors, including, but not limited to: • effective new product selection; • timely completion and introduction of new product designs; • availability of skilled employees; • procurement of licenses for intellectual property rights from third parties under commercially reasonable terms, including those that may be needed to offer interoperability between our products and third-party products; • implementation of appropriate technical standards developed by standard setting organizations; • timely filing and protection of intellectual property rights for new product designs; • availability of development and support tools and collateral literature that make complex new products easy for engineers to understand and use; and • market acceptance of our customers' end products.
Although our Board of Directors has authorized share repurchases of up to $4.00 billion, of which $1.65 billion is still available, the authorization does not obligate us to acquire any particular amount of shares. We cannot guarantee that our share repurchase authorization will be fully consummated or that it will enhance long-term stockholder value.
Although our Board of Directors has authorized share repurchases of up to $4.00 billion, of which $1.56 billion is still available, the authorization does not obligate us to acquire any particular amount of shares. We cannot guarantee that our share repurchase authorization will be fully consummated or that it will enhance long-term stockholder value.
Although our business has not been 37 Table of Contents materially adversely impacted by recent changes in the value of the U.S. dollar, there can be no assurance as to the future impact that any weakness or strength in the U.S. dollar will have on our business or results of operations. Item 1B. Unresolved Staff Comments None.
Although our business has not been materially adversely impacted by recent changes in the value of the U.S. dollar, there can be no assurance as to the future 39 Table of Contents impact that any weakness or strength in the U.S. dollar will have on our business or results of operations. Item 1B. Unresolved Staff Comments None.
Weakening of foreign markets has resulted in lower demand for our products, which has adversely impacted our revenue in recent quarters and, if such conditions continue, it could have a material adverse effect on our business, results of operations or financial conditions. We purchase a substantial portion of our raw materials and equipment from foreign suppliers.
Weakening of foreign markets, especially in China, has resulted in lower demand for our products, which has adversely impacted our revenue in recent quarters and, if such conditions continue, it could have a material adverse effect on our business, results of operations or financial conditions. We purchase a substantial portion of our raw materials and equipment from foreign suppliers.
The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of labor, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs.
The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of labor, transit disruptions, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs.
For example, in the first three months of fiscal 2023 and in fiscal 2022, COVID-19 related restrictions adversely impacted our manufacturing operations in the U.S., Philippines and Thailand along with our subcontractors' manufacturing operations in Malaysia, Taiwan and China. Similar challenges arose for our logistics service providers, which adversely impacted their ability to ship product to our customers.
Separately, in the first three months of fiscal 2023 and in fiscal 2022, COVID-19 related restrictions adversely impacted our manufacturing operations in the U.S., the Philippines and Thailand along with our subcontractors' manufacturing operations in Malaysia, Taiwan and China. Similar challenges arose for our logistics service providers, which adversely impacted their ability to ship product to our customers.
However, the internal governance of the use of these technologies can be challenging, and our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.
However, the internal governance of the use of these technologies can be challenging, and our employees and consultants may use these tools on an unauthorized basis and our partners may use these tools, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential or other controlled information to unauthorized recipients and the misuse of our or third-party intellectual property.
Commerce Department published a regulation that imposed restrictions on activities in or involving China, Hong Kong, and Macau related to advanced computing integrated circuits (ICs), advanced-node ICs, computer and other commodities that contain such ICs, certain semiconductor manufacturing items, and supercomputers. The regulation also expanded controls on transactions involving semiconductor manufacturing and semiconductor equipment manufacturing end-uses.
Commerce Department published a regulation that imposed restrictions on activities in or involving China, Hong Kong, and Macau related to advanced computing integrated circuits (ICs), advanced-node ICs, computers and other commodities that contain such ICs, certain semiconductor manufacturing items, and supercomputers. The regulation also expanded controls on transactions involving semiconductor manufacturing and semiconductor equipment manufacturing end-uses.
We could incur significant expenses related to such matters, including, but not limited to: • costs related to writing off the value of our inventory of nonconforming products; • recalling nonconforming products; • providing support services, product replacements, or modifications to products and the defense of such claims; • diversion of resources from other projects; • lost revenue or a delay in the recognition of revenue due to cancellation of orders, unpaid receivables, or reimbursement of costs or damages; • customer imposed fines or penalties for failure to meet contractual requirements; and • a requirement to pay damages, penalties or recall costs.
We could incur significant expenses related to such matters, including, but not limited to: • costs related to writing off the value of our inventory of nonconforming products; 30 Table of Contents • recalling nonconforming products; • providing support services, product replacements, or modifications to products and the defense of such claims; • diversion of resources from other projects; • lost revenue or a delay in the recognition of revenue due to cancellation of orders, unpaid receivables, or reimbursement of costs or damages; • customer imposed fines or penalties for failure to meet contractual requirements; and • a requirement to pay damages, penalties or recall costs.
In fiscal 2024, economic weakness in the Chinese market adversely impacted our sales volumes in China. As discussed above, the trade relationship between the U.S. and China remains challenging, economic conditions in China remain uncertain, and we are unable to predict whether such uncertainty will continue or worsen in future periods.
In fiscal 2024 and in fiscal 2025, economic weakness in the Chinese market adversely impacted our sales volumes in China. As discussed above, the trade relationship between the U.S. and China remains challenging and could worsen in 2025, economic conditions in China remain uncertain, and we are unable to predict whether such uncertainty will continue or worsen in future periods.
The success of our technology licensing business depends on various other factors, including, but not limited to: • proper identification of licensee requirements; 21 Table of Contents • timely development and introduction of new or enhanced technology; • our ability to protect and enforce our intellectual property rights for our licensed technology, and enforce the terms of our licenses; • our ability to limit our liability and indemnification obligations to licensees; • availability of development and support services to assist licensees in their design and manufacture of products; • availability of foundry licensees with sufficient capacity to support OEM production; and • market acceptance of our customers' end products.
The success of our technology licensing business depends on various other factors, including, but not limited to: • proper identification of licensee requirements; • timely development and introduction of new or enhanced technology; • our ability to protect and enforce our intellectual property rights for our licensed technology, and enforce the terms of our licenses; • our ability to limit our liability and indemnification obligations to licensees; • availability of development and support services to assist licensees in their design and manufacture of products; • availability of foundry licensees with sufficient capacity to support OEM production; and • market acceptance of our customers' end products.
Further, this regulation expanded the scope of foreign-produced items subject to license requirements under U.S. law and added 28 entities located in China to the U.S. Commerce Department Entity List. In November 2023, the U.S. Commerce Department added restrictions and export license requirements to end uses and product categories previously described in the October 2022 regulation. In addition, the U.S.
Further, this regulation expanded the scope of foreign-produced items subject to license requirements under U.S. law and added 28 entities located in China to the U.S. Commerce Department Entity List. In November 2023, the U.S. Commerce Department added restrictions and export license requirements to end uses and product categories previously described in the October 2022 regulation. To date, the U.S.
Please see the risks related to access to raw materials, components, or equipment on page 14 . In addition, we own product assembly and testing facilities, and finished goods warehouses near Bangkok, Thailand, which has experienced periods of political instability and severe flooding in the past.
Please see the risks related to access to raw materials, components, or equipment on page 16 . In addition, we own product assembly and testing facilities, and finished goods warehouses near Bangkok, Thailand, which has experienced periods of political instability and severe flooding in the past.
Although we maintain business interruption insurance, such insurance will likely not compensate us for any losses or damages, and business interruptions could significantly harm our business. For more information on adverse climate change see our risk " Sustained adverse climate change poses risks that could harm our results of operations" on page 34 .
Although we maintain business interruption insurance, such insurance will likely not compensate us for any losses or damages, and business interruptions could significantly harm our business. For more information on adverse climate change see our risk " Sustained adverse climate change poses risks that could harm our results of operations" on page 36 .
Some of our customers require that we implement practices that are more stringent than those required by applicable laws with respect to labor requirements, the materials contained in our products, energy efficiency, environmental impact or other items. To comply with such requirements, we also require our suppliers to adopt such practices.
Some of our customers require that we implement practices that are more stringent than those required by applicable laws with respect to labor requirements, the materials contained in our products, energy efficiency, environmental impact or other items. To comply with such requirements, we may require our suppliers to adopt such practices.
If this occurs, it may limit the amounts of net sales that we can achieve or require us to make significant investments to be able to manufacture these products in our own existing facilities, at new facilities or at other foundries and assembly and testing contractors.
If this occurs, it may limit the amounts of net sales that we can achieve or require us to make significant investments to be able to manufacture these products in our own facilities or at other foundries and assembly and testing contractors.
For example, the Chinese government announced restrictions relating to certain sales of products containing certain products made by Micron, and they may direct companies within China to purchase Chinese-made products. Similar restrictions on our products or the products of our customers or suppliers could negatively impact our business and financial results.
For example, the Chinese government announced restrictions relating to sales of certain raw materials and to sales of products containing certain products made by Micron, and they may direct companies within China to purchase Chinese-made products. Similar restrictions on our products or the products of our customers or suppliers could negatively impact our business and financial results.
As a result of the material weakness in our internal controls resulting from the IT systems compromise in fiscal 2019, we have taken remediation actions and implemented additional controls and we are continuing to take actions to attempt to address evolving threats.
As a result of the material weakness in our internal controls resulting from the IT systems compromise that we experienced in fiscal 2019, we have taken remediation actions and implemented additional controls and we are continuing to take actions to attempt to address evolving threats.
Although the U.K. data protection regime currently permits data transfers from the U.K. to the EEA and other third countries, covered by a European Commission 'adequacy decision' through the continued use of SCCs and binding corporate rules, these laws and regulations are subject to change, and any such changes could have adverse implications for our transfer of personal data from the U.K. to the EEA and other third countries.
Although the U.K. data protection regime currently permits data transfers from the U.K. to 29 Table of Contents the EEA and other third countries, covered by a European Commission 'adequacy decision' through the continued use of SCCs and binding corporate rules, these laws and regulations are subject to change, and any such changes could have adverse implications for our transfer of personal data from the U.K. to the EEA and other third countries.
We also use several contractors for a portion of the assembly and testing of our products. Specifically, during fiscal 2024, approximately 41% of our assembly requirements and 29% of our test requirements were performed by third-party contractors compared to approximately 41% of our assembly requirements and 33% of our test requirements during fiscal 2023.
We also use several contractors for a portion of the assembly and testing of our products. Specifically, during fiscal 2025, approximately 33% of our assembly requirements and 33% of our test requirements were performed by third-party contractors compared to approximately 41% of our assembly requirements and 29% of our test requirements during fiscal 2024.
This risk would be exacerbated to the extent our competitors for talent, particularly engineering talent, attempt to hire our employees.
This risk would be exacerbated to the extent our competitors for talent, particularly engineering talent, hire our employees.
If implemented, these changes could increase our effective tax rate, decrease our revenue and increase our selling and/or manufacturing costs, which could have a material adverse effect on our business, results of operations or financial conditions.
If implemented, these changes could increase our effective tax rate, decrease our revenue and increase our selling, general, administrative and/or manufacturing costs, which could have a material adverse effect on our business, results of operations or financial conditions.
In such event, we could experience an interruption in production, an increase in manufacturing costs or a decline in product reliability, and our business and operating results could be adversely affected. Further, use of subcontractors increases the risks of misappropriation of our intellectual property. Certain of our SuperFlash and other technology licensees rely on wafer foundries.
In such event, we could experience an interruption in production, an increase in manufacturing costs or a decline in product reliability, and our business and operating results could be adversely affected. Further, use of subcontractors increases the risks of misappropriation of our intellectual property. 17 Table of Contents Certain of our SuperFlash and other technology licensees rely on wafer foundries.
Changes in tax policy, trade regulations or other matters, and any uncertainty surrounding the scope or timing of such changes, could negatively impact the stock market, and reduce the trading price of our stock. For example, in February 2022, the U.S. began implementing widescale sanctions against Russia due to Russia's invasion of Ukraine.
Changes in tariffs, tax policy, trade regulations or other matters, and any uncertainty surrounding the scope or timing of such changes, could negatively impact the stock market, and reduce the trading price of our stock or otherwise impact our business. For example, in February 2022, the U.S. began implementing widescale sanctions against Russia due to Russia's invasion of Ukraine.
The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales.
The financial decline of a 15 Table of Contents large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales.
Infringement of our intellectual property rights by a third-party could result in harm to our competitive position, uncompensated lost market and revenue opportunities for us. Although we continue to aggressively defend and 30 Table of Contents protect our intellectual property on a worldwide basis, there can be no assurance that we will be successful.
Infringement of our intellectual property rights by a third-party could result in harm to our competitive position, uncompensated lost market and revenue opportunities for us. Although we continue to aggressively defend and protect our intellectual property on a worldwide basis, there can be no assurance that we will be successful.
If we are unable to comply with the terms of those grants or arrangements, we may not be able to receive or recognize benefits or we may be required to repay benefits, recognize related charges, or could be required to implement certain limitations on our business, which would adversely affect our operating results and financial position.
If we are unable to comply with the terms of those grants or arrangements, we may not be able to receive or recognize benefits or we may be required to repay benefits, recognize related charges, or could be required to implement 23 Table of Contents certain limitations on our business, which would adversely affect our operating results and financial position.
Further, because we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus. Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals.
Further, because we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers 16 Table of Contents and distributors located in Russia and Belarus. Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals.
The inability to import personal data to the U.S. could significantly and negatively impact our business operations, limit our ability to collaborate with parties that are subject to European, China and other data privacy and security laws, or require us to increase our personal data processing capabilities in Europe and/or elsewhere at significant expense.
The inability to transfer personal data to the U.S. could significantly and negatively impact our business operations, limit our ability to collaborate with parties that are subject to European and other data privacy and security laws, or require us to increase our personal data processing capabilities in Europe and/or elsewhere at significant expense.
In addition, during an industry or economic downturn, there may be an oversupply and decrease in demand for our products, which could reduce our net sales in a given period, increase order push-outs, increase inventory returns, and cause us to carry elevated levels of inventory.
In addition, during an industry or economic downturn (including in recent periods), there may be an oversupply and decrease in demand for our products, which could reduce our net sales in a given period, increase order push-outs, increase inventory returns, and cause us to carry elevated levels of inventory.
From time to time, we or our licensees have contested the amount of royalty payments and related claims have resulted and could result in significant legal fees and require significant attention from our management. These issues may adversely impact the success of our licensing business and adversely affect our future operating results.
From time to time, we or our licensees have 22 Table of Contents contested the amount of royalty payments and related claims have resulted and could result in significant legal fees and require significant attention from our management. These issues may adversely impact the success of our licensing business and adversely affect our future operating results.
Furthermore, our efforts to comply with evolving laws and regulations related to cybersecurity, such as the recently enacted SEC rules requiring disclosure of a material cybersecurity incident, may be costly and any actual or alleged failure to comply could result in investigations, proceedings, investor lawsuits and reputational damage.
Furthermore, our efforts to comply with evolving laws and regulations related to cybersecurity, such as SEC rules requiring disclosure of a material cybersecurity incident, may be costly and any actual or alleged failure to comply could result in investigations, proceedings, investor lawsuits and reputational damage.
In addition, employees and former employees, in particular former employees who become employees of our competitors, customers, licensees, or other third parties, including state actors, have in the past and may in the future misappropriate, wrongfully use, publish, access, process or provide to our competitors, customers, licensees or other third parties, including state actors, our technology, intellectual property, or other proprietary or confidential information.
In addition, employees and former employees, in particular former employees who become employees of our competitors, customers, licensees, or other third parties, including state actors, have in the past and may in the future misappropriate, wrongfully use, publish, access, process or provide to our competitors, customers, licensees or other third 27 Table of Contents parties, including state actors, our technology, intellectual property, or other proprietary or confidential information.
In September 2021, we received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In December 2021, we filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice.
In September 2021, we received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In 33 Table of Contents December 2021, we filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice.
To be awarded new contracts, we may be required to meet certain levels of the Cybersecurity Maturity Model Certifications that we may not meet, or may choose not to meet. We are also required to have facility 22 Table of Contents security clearances to perform classified contracts and to build and sell classified products for U.S. governmental agencies.
To be awarded new contracts, we may be required to meet certain levels of the Cybersecurity Maturity Model Certifications that we may not meet, or may choose not to meet. We are also required to have facility security clearances to perform classified contracts and to build and sell classified products for U.S. governmental agencies.
These transactions are subject to a number of risks similar to those we 23 Table of Contents face with our acquisitions including our ability to realize the expected benefits of any such transaction, to successfully market and sell products resulting from such transactions or to successfully integrate any technology developed through such transactions.
These transactions are subject to a number of risks similar to those we face with our acquisitions including our ability to realize the expected benefits of any such transaction, to successfully market and sell products resulting from such transactions or to successfully integrate any technology developed through such transactions.
It is also possible that government, customers, investors and other stakeholders might not be satisfied with our policies, programs, goals, performance and related disclosures, or the speed of their adoption, 35 Table of Contents implementation and measurable success, or that we have adopted such policies, programs and commitments.
It is also possible that government, customers, investors and other stakeholders might not be satisfied with our policies, programs, goals, performance and related disclosures, or the speed of their adoption, implementation and measurable success, or that we have adopted such policies, programs and commitments.
Complying with regulations from different jurisdictions related to AI could increase our cost of doing business, may change the way that we operate in certain jurisdictions, or may impede our ability to offer certain products and services in certain jurisdictions if we are unable to comply with regulations.
Complying with regulations from different jurisdictions related to AI could increase our cost of doing business, may change the way that we operate in certain jurisdictions, or may impede our ability to use AI in our internal operations or offer certain products and services in certain jurisdictions if we are unable to comply with regulations.
If any of these risks occur or are worse than we anticipate, our sales could decrease and our operating results could suffer, we could face an increase in the cost of components, production delays, business interruptions, delays in obtaining export licenses, or denials of such licenses, tariffs and other restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a material adverse effect on our business.
If any of these risks occur or are worse than we anticipate, our sales could decrease and our operating results could suffer, we could face an increase in the cost of components, production delays, business interruptions, delays in obtaining export licenses, or denials of such licenses, tariffs and trade restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws, any of which could ultimately have a 18 Table of Contents material adverse effect on our business.
If we do receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs. Our use of third parties reduces our control over the subcontracted portions of our business.
If we conclude our CHIPS Act negotiations and receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs. Our use of third parties reduces our control over the subcontracted portions of our business.
Concerns relating to the responsible use of technologies, including new and evolving technologies such as AI, in our products may result in reputational or financial harm and liability and may cause us to incur costs to resolve such issues.
Concerns relating to the responsible use of technologies, including new and evolving technologies such as AI, in our internal operations, products and services may result in reputational or financial harm and liability and may cause us to incur costs to resolve such issues.
If we are unable to alternately source or manufacture certain of our products, or discontinue use of products from Prohibited Companies, if any, when the NDAA amendment goes into effect in December 2027, this could adversely impact our sales to U.S. government agencies and their prime customers.
If we are unable to alternately source or manufacture certain of our products, or discontinue use of products from Prohibited Companies, if any, when Section 5949 of the NDAA 2023 goes into effect in December 2027, this could adversely impact our sales to U.S. government agencies and their prime customers.
We are committed to corporate responsibility and actively manage these issues including through our guiding values and our internal policies. As an example, since we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus.
We are committed to corporate responsibility and actively manage these issues in accordance with applicable law and including through our guiding values and our internal policies. As an example, since we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus.
We have taken steps to mitigate the impact of some of these events should they occur; however, we cannot be certain that we will avoid a significant impact on our business in the event of a business interruption.
We have taken steps to mitigate the impact 21 Table of Contents of some of these events should they occur; however, we cannot be certain that we will avoid a significant impact on our business in the event of a business interruption.
These requirements may increase our own costs, as well as those passed on to us by our supply chain. S ustained adverse climate change poses risks that could harm our results of operations.
These requirements may increase our own costs, as well as those passed on to us by our supply chain. 35 Table of Contents S ustained adverse climate change poses risks that could harm our results of operations.
While we had approximately 123,000 customers, and our ten largest direct customers accounted for approximately 12% of our total revenue in fiscal 2024, and four of our top ten direct customers are contract manufacturers that perform manufacturing services for many customers, cancellation of customer contracts could have an adverse impact on our revenue and profits.
While we had approximately 109,000 customers, and our ten largest direct customers accounted for approximately 12% of our total revenue in fiscal 2025, and four of our top ten direct customers are contract manufacturers that perform manufacturing services for many customers, cancellation of customer contracts could have an adverse impact on our revenue and profits.
A downgrade of our credit rating by a major credit rating agency could result in increased borrowing costs and could adversely affect our ability to access the debt markets to refinance our existing debt or finance future debt.
A 38 Table of Contents downgrade of our credit rating by a major credit rating agency could result in increased borrowing costs and could adversely affect our ability to access the debt markets to refinance our existing debt or finance future debt.
We use foundries and other foreign contractors for a significant portion of our assembly and testing and wafer fabrication requirements. 16 Table of Contents Our reliance on foreign operations, foreign suppliers, maintenance of substantially all of our finished goods inventory at foreign locations and significant foreign sales exposes us to foreign political and economic risks, including, but not limited to: • economic uncertainty in the worldwide markets served by us; • political instability, including changes in relations between China and Taiwan which could disrupt the operations of our Taiwan-based third-party wafer foundries, and subcontractors; • social and economic instability due to public health concerns, wars, or other factors; • trade restrictions and changes in tariffs; • supply chain disruptions or delays; • potentially adverse tax consequences; • import and export license requirements and restrictions; • changes in laws related to taxes, trade, environmental, health and safety, technical standards, climate change, and consumer protection; • restrictions on the transfer of funds, including currency controls in China, which could negatively affect the amount and timing of certain customer payments, and as a results our cash flows; • currency fluctuations and foreign exchange regulations; • difficulties in staffing and managing international operations; • employment regulations; • disruptions due to cybersecurity incidents; • disruptions in international transport or delivery; • public health conditions (including viral outbreaks such as COVID-19); and • difficulties in collecting receivables and longer payment cycles.
Our reliance on foreign operations, foreign suppliers, maintenance of substantially all of our finished goods inventory at foreign locations and significant foreign sales exposes us to foreign political and economic risks, including, but not limited to: • economic uncertainty in the worldwide markets we serve; • trade restrictions and changes in tariffs; • political instability, including changes in relations between China and Taiwan which could disrupt the operations of our Taiwan-based third-party wafer foundries, and subcontractors; • social and economic instability due to public health concerns, wars, or other factors; • supply chain disruptions or delays; • potentially adverse tax consequences; • import and export license requirements and restrictions; • changes in laws related to taxes, trade, environmental, health and safety, technical standards, climate change, and consumer protection; • restrictions on the transfer of funds, including currency controls in China, which could negatively affect the amount and timing of certain customer payments, and as a results our cash flows; • currency fluctuations and foreign exchange regulations; • difficulties in staffing and managing international operations; • employment regulations; • disruptions due to cybersecurity incidents; • disruptions in international transport or delivery; • public health conditions (including viral outbreaks such as COVID-19); and • difficulties in collecting receivables and longer payment cycles.
Any improper handling of confidential data, or significant disruption to our systems or networks, including, but not limited to, any that may relate to new system implementations, computer viruses, security breaches or incidents, cyber-attacks, ransom-style attacks, theft or tampering, inadvertent error, facility issues, natural disasters, terrorism, war, telecommunication failures or energy blackouts, security breaches or incidents in our customers’ or third-party providers’ networks, in third-party products we use, or in cloud-based services provided to, by, or enabled by us, or any perception any of the foregoing has occurred, could have a material adverse impact on our business, operations, supply chain, sales and operating results, result in regulatory inquiries, investigations or other proceedings against us, result in claims, demands and litigation against us, or damage our reputation.
Any improper handling of confidential data, or significant disruption to our systems or networks, including, but not limited to, any that may relate to new system implementations, computer viruses, security breaches or incidents, cyber-attacks, ransom-style attacks, theft or tampering, inadvertent error, facility issues, natural disasters, terrorism, war, telecommunication failures or energy blackouts, security breaches or incidents in our customers’ or third-party providers’ networks, in third-party products we use, or in cloud-based services provided to, by, or enabled by us, or any data we or our service providers maintain or otherwise process, including but not limited to, data belonging to us or our customers, suppliers, contractors or employees, or any perception any of the foregoing has occurred, could have a material adverse impact on our business, operations, supply chain, sales and operating results, result in regulatory inquiries, investigations or other proceedings against us, result in claims, demands and litigation against us, or damage our reputation.
We are dependent on wafer foundries and other contractors, as are our SuperFlash and other licensees. We rely on outside wafer foundries for a significant portion of our wafer fabrication needs. Specifically, during fiscal 2024 and fiscal 2023, approximately 64% and 63%, respectively, of our net sales came from products that were produced at outside wafer foundries.
We are dependent on wafer foundries and other contractors, as are our SuperFlash and other licensees. We rely on outside wafer foundries for a significant portion of our wafer fabrication needs. Specifically, during fiscal 2025 and fiscal 2024, approximately 64% of our net sales came from products that were produced at outside wafer foundries.
In addition, our existing and new patents, trademarks and copyrights that are issued may not have sufficient scope or strength to provide meaningful protection or commercial advantage to us. We may be subject to, or may initiate, interference proceedings in the U.S.
In addition, our existing and new patents, trademarks and copyrights that are issued may not have sufficient scope or strength to provide meaningful protection or 31 Table of Contents commercial advantage to us. We may be subject to, or may initiate, interference proceedings in the U.S.
The Preferred Supply Program and the LTSAs are not a guarantee of supply; however, they were designed to provide the highest priority for those orders which are under these programs, and the capacity priority was on a first-come, first-served basis until the available capacity was booked.
LTSAs are not a guarantee of supply; however, they were designed to provide the highest priority for those orders which were under this program, and the capacity priority was on a first-come, first-served basis until the available capacity was booked.
Any such matter, or any perception that it has occurred, could harm our business or competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages, and may result in regulatory investigations, inquiries or other proceedings, enforcement actions, remediation obligations, claims for damages, litigation, and fines, penalties, damages, other liabilities, and other sanctions.
Any such matter, or any perception that it has occurred, could harm our 26 Table of Contents business or competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages, and may result in lower revenue, lower margins, regulatory investigations, inquiries or other proceedings, enforcement actions, remediation obligations, claims for damages, litigation, and fines, penalties, damages, other liabilities, and other sanctions.
Uncertain global economic and public health conditions, such as the COVID-19 pandemic, have caused and may in the future cause our operating results to fluctuate significantly and make comparisons between periods less meaningful. Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, or suppliers.
Uncertain global economic and public health conditions have caused and may in the future cause our operating results to fluctuate significantly and make comparisons between periods less meaningful. Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, or suppliers.
The cost to implement such practices may cause us to incur higher costs and reduce our profitability, and if we do not implement such practices, such 24 Table of Contents customers may disqualify us as a supplier, resulting in decreased revenue opportunities.
The cost to implement such practices may cause us to incur higher costs and reduce our profitability, and if we do not implement such practices, such customers may disqualify us as a supplier, resulting in decreased revenue opportunities.
Additionally, the EU AI Act could impose onerous obligations that may disadvantage us and require us to change our business practices. In the U.S., federal, state, and local governments have enacted numerous laws and regulations relating to privacy, data protection, and cybersecurity.
Additionally, new and updated AI regulations could impose onerous obligations that may disadvantage us and require us to change our business practices. In the U.S., federal, state, and local governments have enacted numerous laws and regulations relating to privacy, data protection and handling, and cybersecurity.
Any downturn in global or regional economic conditions, as a result of rising interest rates, high inflation, instability in the banking sector, the enactment of broad sanctions by the U.S. or other countries against Russia or China, the enactment of broad sanctions against the U.S. by other countries, public health concerns, industry work stoppages or other factors, may adversely impact their financial viability.
Any downturn in global or regional economic conditions, as a result of tariffs, high interest rates, high inflation, instability in the banking sector, the enactment of broad sanctions or tariffs by the U.S. or other countries, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability.
We are subject to numerous laws and regulations in the U.S. and internationally regarding privacy, data protection and cybersecurity, such as the European Union’s (EU) General Data Protection Regulation (GDPR), the U.K. equivalent to the GDPR, the California Consumer Privacy Act (CCPA), and the California Privacy Rights Act (CPRA).
We are subject to numerous laws and regulations in the U.S. and internationally regarding privacy, data protection and handling, and cybersecurity, such as the European Union’s (EU) General Data Protection Regulation (GDPR), the U.K. equivalent to the GDPR, and the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), and the EU Cyber Resilience Act and Cybersecurity Act.
Such improper handling of confidential data, or system or network disruption, or any cyber-attack or other means of effectuating a security breach or incident, could result in loss, unavailability, an unauthorized release of, or other unauthorized use or processing of, personal data, or our suppliers’ or our customers’ intellectual property or confidential, proprietary or sensitive information.
Such improper handling of confidential data, or system or network disruption, or any cyber-attack or other means of effectuating a security breach or incident, could result in loss or unavailability of all or a portion of our systems and business operations, and a loss, unavailability, an unauthorized release of, or other unauthorized use or processing of, personal data, or our suppliers’ or our customers’ intellectual property or confidential, proprietary or sensitive information.
The pandemic could adversely impact our business in future periods if the impact of COVID-19 or other public health issues again becomes severe in one or more of our key markets such as China or in areas where our suppliers or manufacturing operations are located.
Any future pandemic could adversely impact our business in future periods if public health issues again becomes severe in one or more of our key markets such as China or in areas where our suppliers or manufacturing operations are located.
Our ability to compete successfully depends on a number of factors, including, but not limited to: • changes in demand in the markets that we serve and the overall rate of growth or contraction of such markets, including but not limited to the automotive, personal computing and consumer electronics markets; • our ability to obtain adequate foundry and assembly and test capacity and supplies at acceptable prices; • our ability to ramp production and increase capacity as needed, at our wafer fabrication and assembly and test facilities; • the quality, performance, reliability, features, ease of use, pricing and diversity of our products; • our success in designing and manufacturing new products including those implementing new technologies; • the rate at which customers incorporate our products into their applications and the success of such applications; • the rate at which the markets that we serve redesign and change their own products; • product introductions by our competitors; • the number, nature and success of our competitors in a given market; • our ability to protect our products and processes by effective utilization of intellectual property rights; • our ability to address the needs of our customers; and • general market and economic conditions.
Our ability to compete successfully depends on a number of factors, including, but not limited to: • changes in demand in the markets that we serve and the overall rate of growth or contraction of such markets, including but not limited to the automotive, personal computing and consumer electronics markets; • our success in designing and manufacturing new products including those implementing new technologies or complying with new governmental restrictions regarding implementation of new technologies; • the rate at which customers incorporate our products into their applications and the success of such applications; • our ability to obtain adequate foundry and assembly and test capacity and supplies at acceptable prices; 19 Table of Contents • our ability to ramp production and increase capacity as needed, at our wafer fabrication and assembly and test facilities; • the quality, performance, reliability, features, ease of use, pricing and diversity of our products; • the rate at which the markets that we serve redesign and change their own products; • product introductions by our competitors; • the number, nature and success of our competitors in a given market; • our ability to protect our products and processes by effective utilization of intellectual property rights; • our ability to address the needs of our customers; • our ability to attract and retain talent, including talent with expertise in developing areas such as AI; and • general market and economic conditions.
However, in the future, we may be unable to maintain average 18 Table of Contents selling prices due to increased pricing pressure, including as a result of actions taken by foreign governments such as China to favor companies located in their own country, which could adversely impact our operating results.
However, in the future, we may be unable to maintain average selling prices due to increased pricing pressure, including as a result of actions taken by foreign governments such as China to favor companies located in their own country through tariffs or other actions, which could adversely impact our operating results.
Future adverse conditions in the U.S. or global economies and labor markets or credit markets could materially impact distributor operations. Any deterioration in the financial condition, or disruption in the operations of our distributors, could adversely impact the flow of our products to our end customers and adversely impact our results of operation.
Future adverse conditions in the U.S. or global economies and labor markets or credit markets due to tariffs or other factors could materially impact distributor operations. Any deterioration in the financial condition, or disruption in the operations of our distributors, would likely adversely impact the flow of our products to our end customers and adversely impact our results of operation.
In particular, in fiscal 2023 and in fiscal 2022, we experienced 14 Table of Contents increased prices at certain suppliers for certain materials required for production purposes. However in fiscal 2024, the pricing environment stabilized compared to the two prior fiscal years.
In particular, in fiscal 2023 and in fiscal 2022, we experienced increased prices at certain suppliers for certain materials required for production purposes. However, in fiscal 2024 and fiscal 2025, the pricing environment stabilized compared to the two prior fiscal years.
If China were to restrict or stop exporting these materials, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost.
If China were to further restrict or stop exporting these materials or pressure other countries to do so, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost.
In addition, the existence of the Convertible Debt may encourage short selling by market participants because the conversion of the Convertible Debt could be used to satisfy short positions, or anticipated conversion of the Convertible Debt into shares of our common stock could depress the price of our common stock.
In addition, the existence of the Convertible Debt, Series A Preferred Stock or Depositary Shares may encourage short selling by market participants because the conversion of the Convertible Debt, Series A Preferred Stock or Depositary Shares, as applicable, could be used to satisfy short positions, or anticipated conversion of the Convertible Debt, Series A Preferred Stock or Depositary Shares into shares of our common stock could depress the price of our common stock.
As a result of the foregoing risks or similar risks, the imposition of sanctions could have a material adverse effect on our business, results of operations or financial condition. New technology trends, such as AI, require us to keep pace with evolving regulations and industry standards.
As a result of the foregoing risks or similar risks, 34 Table of Contents the imposition of sanctions could have a material adverse effect on our business, results of operations or financial condition. New technology trends, such as AI and cyber resiliency and security requirements, require us and our customers to keep pace with evolving regulations and industry standards.
AI poses emerging legal, social, and ethical issues and presents risks and challenges that could affect its adoption, and therefore 27 Table of Contents our business.
AI poses emerging legal, social, and ethical issues and presents risks and challenges that could affect its adoption, and therefore our business.

… 174 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed25 unchanged
Biggest changeOur CISO is a former CPA that has 34 years of experience in leading global accounting and business information systems groups including strategy, applications, infrastructure, information security, support, and execution. 39 Table of Contents Digital security at Microchip is the primary responsibility of our ITSS team.
Biggest changeOur CISO is a former CPA that has 35 years of experience in leading global accounting and business information systems groups including strategy, applications, infrastructure, information security, support, and execution. 41 Table of Contents Digital security at Microchip is the primary responsibility of our ITSS team.
Security Awareness Program to Train and Test Personnel We sponsor a multi-faceted security awareness program that includes regular, mandatory trainings for our personnel on best practices for cyber-hygiene including: multifactor authentication and single sign-on use for cloud applications; ways to identify social engineering techniques, policy and process awareness, periodic phishing simulations and other preparedness testing. 38 Table of Contents Cyber Incident Response Plan We maintain a cross-functional cyber incident response plan with defined roles and responsibilities and reporting protocols.
Security Awareness Program to Train and Test Personnel We sponsor a multi-faceted security awareness program that includes regular, mandatory trainings for our personnel on best practices for cyber-hygiene including: multifactor authentication and single sign-on use for cloud applications; ways to identify social engineering techniques, policy and process awareness, periodic phishing simulations and other preparedness testing. 40 Table of Contents Cyber Incident Response Plan We maintain a cross-functional cyber incident response plan with defined roles and responsibilities and reporting protocols.
Interruptions in and unauthorized access to our IT systems, and security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process, could adversely affect our business”, in this Annual Report on Form 10-K. 40 Table of Contents
Interruptions in and unauthorized access to our IT systems, and security breaches or incidents impacting our systems or data that we or our service providers maintain or otherwise process, could adversely affect our business”, in this Annual Report on Form 10-K. 42 Table of Contents
Conclusion As of March 31, 2024, we have not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents that have materially affected Microchip, our business strategy, our results of operations or our financial condition.
Conclusion As of March 31, 2025, we have not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents that have materially affected Microchip, our business strategy, our results of operations or our financial condition.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changePrincipal Operations Gresham, Oregon 826,500 Wafer fabrication (Fab 4), R&D center, warehousing and administrative offices Chandler, Arizona 720,000 Executive and administrative offices, wafer probe, R&D center, sales and marketing, and computer and service functions Lamesa, Calamba, Philippines 610,300 Assembly and test, warehousing and administrative offices Chacherngsao, Thailand 498,100 Assembly and test, wafer probe, sample center, warehousing and administrative offices Colorado Springs, Colorado 480,000 Wafer fabrication (Fab 5), test and R&D Canlubang, Calamba, Philippines 460,000 Wafer probe, test, warehousing and administrative offices Tempe, Arizona 388,100 Wafer fabrication (Fab 2), R&D center, warehousing and administrative offices Bangalore, India 294,000 R&D center, sales and marketing support and administrative offices Chacherngsao, Thailand 287,300 Assembly and test, warehousing and administrative offices Chennai, India 187,000 R&D center Hyderabad, India 167,554 Design and engineering Lawrence, Massachusetts 160,000 Manufacturing and administrative offices Rousset, France 144,500 Test, R&D and administrative offices Mount Holly Springs, Pennsylvania 100,000 Manufacturing, R&D and administrative offices Garden Grove, California 98,100 Manufacturing, R&D and administrative offices San Jose, California 98,000 R&D and administrative offices Neckarbischofsheim, Germany 83,800 Manufacturing and administrative offices Nantes, France 77,000 Wafer probe, test, R&D, warehousing and administrative offices San Jose, California 71,000 R&D and administrative offices San Jose, California 57,000 R&D and administrative offices Beverly, Massachusetts 52,100 Manufacturing Heilbronn, Germany 48,000 R&D and administrative offices Karlsruhe, Germany 46,000 R&D and administrative offices Ennis County, Ireland 40,000 Manufacturing, R&D and administrative offices Simsbury, Connecticut 32,500 Manufacturing, R&D and administrative offices Shanghai, China 21,000 R&D, sales and marketing and administrative offices Hsinchu, Taiwan 15,000 R&D and administrative offices In addition to the facilities we own, we lease several manufacturing, research and development facilities and sales offices in North America, Europe and Asia.
Biggest changePrincipal Operations Gresham, Oregon 826,500 Wafer fabrication (Fab 4), R&D center, warehousing and administrative offices Chandler, Arizona 720,000 Executive and administrative offices, wafer probe, R&D center, sales and marketing, and computer and service functions Lamesa, Calamba, Philippines 610,300 Assembly and test, warehousing and administrative offices Chacherngsao, Thailand 498,100 Assembly and test, wafer probe, sample center, warehousing and administrative offices Colorado Springs, Colorado 480,000 Wafer fabrication (Fab 5), test and R&D Canlubang, Calamba, Philippines 460,000 Wafer probe, test, warehousing and administrative offices Tempe, Arizona (1) 388,100 Wafer fabrication (Fab 2), R&D center, warehousing and administrative offices Bangalore, India 294,000 R&D center, sales and marketing support and administrative offices Chacherngsao, Thailand 287,300 Assembly and test, warehousing and administrative offices Chennai, India 187,000 R&D center Hyderabad, India 167,554 Design and engineering Lawrence, Massachusetts 160,000 Manufacturing and administrative offices Rousset, France 144,500 Test, R&D and administrative offices Mount Holly Springs, Pennsylvania 100,000 Manufacturing, R&D and administrative offices Garden Grove, California 98,100 Manufacturing, R&D and administrative offices San Jose, California 98,000 R&D and administrative offices Neckarbischofsheim, Germany 83,800 Manufacturing and administrative offices Nantes, France 77,000 Wafer probe, test, R&D, warehousing and administrative offices San Jose, California 71,000 R&D and administrative offices San Jose, California 57,000 R&D and administrative offices Beverly, Massachusetts 52,100 Manufacturing Heilbronn, Germany 48,000 R&D and administrative offices Karlsruhe, Germany 46,000 R&D and administrative offices Ennis County, Ireland 40,000 Manufacturing, R&D and administrative offices Simsbury, Connecticut 32,500 Manufacturing, R&D and administrative offices Shanghai, China 21,000 R&D, sales and marketing and administrative offices Hsinchu, Taiwan 15,000 R&D and administrative offices (1) Our Fab 2 wafer fabrication facility located in Tempe, Arizona is classified as held for sale as of March 31, 2025.
Item 2. Properties At March 31, 2024, we owned and used the facilities described below: Location Approximate Total Sq. Ft.
Item 2. Properties At March 31, 2025, we owned and used the facilities described below: Location Approximate Total Sq. Ft.
We currently believe that our existing facilities are suitable and will be adequate to meet our requirements for at least the next 12 months.
In addition to the facilities we own, we lease several manufacturing, research and development facilities and sales offices in North America, Europe and Asia. We currently believe that our existing facilities are suitable and will be adequate to meet our requirements for at least the next 12 months.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−2 removed1 unchanged
Biggest changeCumulative Total Return March 2019 2020 2021 2022 2023 2024 Microchip Technology Incorporated 100.00 83.05 192.59 188.72 214.05 233.99 S&P 500 Stock Index 100.00 93.02 145.44 168.20 155.20 201.57 Philadelphia Semiconductor Index 100.00 110.38 231.77 257.39 246.23 378.21 Data acquired by Research Data Group, Inc.
Biggest changeCumulative Total Return March 2020 2021 2022 2023 2024 2025 Microchip Technology Incorporated 100.00 231.89 227.33 257.73 281.73 155.82 S&P 500 Stock Index 100.00 156.35 180.81 166.84 216.69 234.58 Philadelphia Semiconductor Index 100.00 209.98 233.18 233.07 342.64 301.01 Data acquired by Research Data Group, Inc.
(www.researchdatagroup.com) The information in this Form 10-K appearing under the heading "Stock Price Performance Graph" is being "furnished" pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be "soliciting material" or "filed" with the SEC or subject 42 Table of Contents to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act except to the extent that we specifically request that it be treated as such.
(www.researchdatagroup.com) The information in this Form 10-K appearing under the heading "Stock Price Performance Graph" is being "furnished" pursuant to Item 201(e) of Regulation S-K and shall not be deemed to be "soliciting material" or "filed" with the SEC or subject 44 Table of Contents to Regulation 14A or 14C, other than as provided in Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act except to the extent that we specifically request that it be treated as such.
Comparison of 5 year Cumulative Total Return* *$100 invested on March 31, 2019 in stock or index, including reinvestment of dividends Fiscal year ending March 31. Copyright © 2024 Standard & Poor's, a division of S&P Global. All rights reserved.
Comparison of 5 year Cumulative Total Return* *$100 invested on March 31, 2020 in stock or index, including reinvestment of dividends Fiscal year ending March 31. Copyright © 2025 Standard & Poor's, a division of S&P Global. All rights reserved.
On May 16, 2024, there were approximately 543 holders of record of our common stock. This figure does not reflect beneficial ownership of shares held in nominee names. For a description of our dividend policies, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," included herein.
On May 15, 2025, there were approximately 541 holders of record of our common stock. This figure does not reflect beneficial ownership of shares held in nominee names. For a description of our dividend policies, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," included herein.
Refer to "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," at page 60 below, for the information required by Item 201(d) of Regulation S-K with respect to securities authorized for issuance under our equity compensation plans at March 31, 2024.
Refer to "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," at page 62 below, for the information required by Item 201(d) of Regulation S-K with respect to securities authorized for issuance under our equity compensation plans at March 31, 2025. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 45 Table of Contents
Removed
Issuer Purchases of Equity Securities The following table sets forth our purchases of our common stock in the three months ended March 31, 2024: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program (1) (in millions) January 1, 2024 - January 31, 2024 — $ — — February 1, 2024 - February 29, 2024 2,790,831 $ 83.05 2,790,831 March 1, 2024 - March 31, 2024 1,745,924 $ 89.10 1,745,924 4,536,755 4,536,755 $ 1,646.5 (1) In November 2021, our Board of Directors authorized the repurchase of up to $4.00 billion of our common stock in the open market or in privately negotiated transactions.
Removed
There is no expiration date associated with this authorization. Item 6. [Reserved] 43 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

96 edited+32 added−24 removed58 unchanged
Biggest changeSignificant transactions affecting our net financing cash flows included: • in fiscal 2024, $537.7 million of cash used to pay down certain principal of our debt, including our 2015 Senior Convertible Debt, our 2017 Senior Convertible Debt, our 2017 Junior Convertible Debt, our 4.333% 2023 Notes, our 2.670% 2023 Notes, our 0.972% 2024 Notes, and our Revolving Credit Facility, partially funded by proceeds from borrowings on our 2025 Term Loan Facility, proceeds from the issuance of our Commercial Paper, and proceeds from the issuance of our 5.050% 2029 Notes, and • in fiscal 2023, $1.47 billion of cash used to pay down certain principal of our debt, including our 2015 Senior Convertible Debt, our 2017 Senior Convertible Debt, our 2017 Junior Convertible Debt, and our Revolving Credit Facility, and • in fiscal 2024 and fiscal 2023, we paid cash dividends to our stockholders of $911.5 million and $695.3 million, respectively, and • in fiscal 2024 and fiscal 2023, we repurchased shares of our common stock for $982.1 million and $945.8 million, respectively.
Biggest changeSignificant transactions affecting our net financing cash flows included: • in fiscal 2025, $1.45 billion of net proceeds from the issuances of our Series A Preferred Stock, and • in fiscal 2025, $516.5 million of net cash used to pay down certain principal of our debt including settlement of our 2020 Convertible Debt, settlement of our 2025 Term Loan Facility, purchase of our capped call options, and the repayment of our 0.983% 2024 Notes partially funded by proceeds from the issuances of our 4.900% 2028 Senior Notes, our 5.050% 2030 Senior Notes, our 2024 Senior Convertible Debt and our Commercial Paper, and • in fiscal 2024, $537.7 million of cash used to pay down certain principal of our debt, including settlement of a portion of our outstanding Convertible Debt, our 4.333% 2023 Notes, our 2.670% 2023 Notes, our 0.972% 2024 Notes, and our Revolving Credit Facility, partially funded by proceeds from borrowings on our 2025 Term Loan Facility, proceeds from the issuance of our Commercial Paper, and proceeds from the issuance of our 5.050% 2029 Notes, and • in fiscal 2025 and fiscal 2024, we paid cash dividends to our stockholders of $975.7 million and $911.5 million, respectively, and • in fiscal 2025 and fiscal 2024, we repurchased shares of our common stock for $96.5 million and $982.1 million, respectively.
We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained based on their technical merits under currently enacted law. If this threshold is not met, no tax benefit of the uncertain tax position is recognized.
We record benefits for uncertain tax positions based on an assessment of whether it is more likely than not that the tax positions will be sustained based on their technical merits under currently enacted law. If this threshold is not met, no tax benefit of the uncertain tax position is recognized.
Operating Activities Net cash provided by operating activities was $2.89 billion in fiscal 2024 primarily due to net income of $1.91 billion, adjusted for non-cash and non-operating charges of $1.06 billion and net cash outflows of $76.7 million from changes in our operating assets and liabilities.
Net cash provided by operating activities was $2.89 billion in fiscal 2024 primarily due to net income of $1.91 billion, adjusted for non-cash and non-operating charges of $1.06 billion and net cash outflows of $76.7 million from changes in our operating assets and liabilities.
Summarized Financial Information The tables below present the summarized financial information on a combined basis for Microchip Technology Incorporated and the following subsidiaries of Microchip Technology Incorporated that provide guarantees of our Senior Notes: Atmel Corporation, Microchip Holding Corporation, Microchip Technology LLC, Silicon Storage Technology, Inc., Microsemi Corporation, and Microsemi Storage Solutions, Inc. (such subsidiaries collectively, the Subsidiary Obligors).
Summarized Financial Information The tables below present the summarized financial information on a combined basis for Microchip Technology Incorporated and the following subsidiaries of Microchip Technology Incorporated that provide guarantees of our Senior Notes: Atmel Corporation, Microchip Holding Corporation, Microchip Technology LLC, Silicon Storage Technology, Inc., Microsemi Corporation, and Microchip Storage Solutions LLC (such subsidiaries collectively, the Subsidiary Obligors).
The ultimate outcome of disputes of this nature is uncertain, and if the IRS and IRB were to prevail on their assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
The ultimate outcome of disputes of this nature is uncertain, and if the IRS, IRB and GTA were to prevail on their assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
Statutory Notice of Deficiencies and proposed income adjustment from the Malaysian Inland Revenue Board; • Our expectation regarding the treatment of our unrecognized tax benefits in the next 12 months; • Our belief that the expiration of any tax holidays will not have a material impact on our effective tax rate; • Our expectations regarding our tax expense, cash taxes and effective tax rate; • Our expectation that the global minimum tax (GMT) will not have a material impact on our fiscal 2025 results; • Our belief that the estimates used in preparing our consolidated financial statements are reasonable; • Our actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis; • Our ability to obtain and maintain patents and intellectual property licenses and minimize the effects of litigation or other disputes or the loss of patent protection; • The level of risk we are exposed to for product liability claims or indemnification claims; • The effect of fluctuations in market interest rates on our income and/or cash flows; • The effect of fluctuations in currency rates; • The impact of inflation on our business; • Our ability to increase our borrowings or seek additional equity or debt financing to maintain or expand our facilities, or to fund cash dividends, share repurchases, acquisitions or other corporate activities, and that the timing and amount of such financing requirements will depend on a number of factors; • Our expected debt obligation maturities and plans to refinance our existing debt; • Our expectations regarding the amounts and timing of repurchases under our stock repurchase program; • Our expectation that our reliance on third-party contractors may increase over time as our business grows; • Our ability to collect accounts receivable; • The impact of the legislative and policy changes implemented or which may be implemented by the current administration on our business and the trading price of our stock; • Our belief that our culture, values, and organizational development and training programs will continue to provide an inclusive work environment where our employees are empowered and engaged to deliver the best embedded control solutions; • Our belief that our continued success is driven by the skills, knowledge, and innovative capabilities of our personnel, a strong technical service presence, and our ability to rapidly commercialize new and enhanced products; • The potential impact of changes in regulations or in their enforcement, including with respect to the capital expenditures or other costs or expenses; • The impact of any failure by use to adequately control the storage, use, discharge and disposal of regulated substances; • Estimates and plans regarding pension liability and payments expected to be made for benefits earned; • Our expectations regarding the amount, timing, and future applications for investment tax credits under the CHIPS Act; • Our expectations regarding past or potential future acquisitions, joint development agreements or other strategic relationships and any related benefits; and • The impact on our business stemming from Russia’s invasion of Ukraine.
Statutory Notice of Deficiencies and proposed income adjustment from the Malaysian Inland Revenue Board; • Our expectation regarding the treatment of our unrecognized tax benefits in the next 12 months; • Our belief that the expiration of any tax holidays will not have a material impact on our effective tax rate; • Our expectations regarding our tax expense, cash taxes and effective tax rate; • Our expectation that the global minimum tax (GMT) will not have a material impact on our fiscal 2026 results; • Our belief that the estimates used in preparing our consolidated financial statements are reasonable; • Our actions to vigorously and aggressively defend and protect our intellectual property on a worldwide basis; • Our ability to obtain and maintain patents and intellectual property licenses and minimize the effects of litigation or other disputes or the loss of patent protection; • The level of risk we are exposed to for product liability claims or indemnification claims; • The effect of fluctuations in market interest rates on our income and/or cash flows; • The effect of fluctuations in currency rates; • The impact of inflation on our business; • Our ability to increase our borrowings or seek additional equity or debt financing to maintain or expand our facilities, or to fund cash dividends, share repurchases, acquisitions or other corporate activities, and that the timing and amount of such financing requirements will depend on a number of factors; • Our expected debt obligation maturities, including the conversion of debt, Depositary Shares, and Series A Preferred Stock, and plans to refinance our existing debt; • Our expectations regarding the amounts and timing of repurchases under our stock repurchase program; • Our expectation that our reliance on third-party contractors may increase over time as our business grows; • Our ability to collect accounts receivable; • The impact of the legislative and policy changes implemented or which may be implemented by the current administration on our business and the trading price of our stock; • Our belief that our culture, values, and organizational development and training programs will continue to provide a work environment where our employees are empowered and engaged to deliver the best embedded control solutions; • Our belief that our continued success is driven by the skills, knowledge, and innovative capabilities of our personnel, a strong technical service presence, and our ability to rapidly commercialize new and enhanced products; • The potential impact of changes in regulations or in their enforcement, including with respect to the capital expenditures or other costs or expenses; • The impact of any failure by use to adequately control the storage, use, discharge and disposal of regulated substances; • Estimates and plans regarding pension liability and payments expected to be made for benefits earned; • Our expectations regarding the amount, timing, and future applications for investment tax credits under the CHIPS Act; • Our expectations regarding past or potential future acquisitions, joint development agreements or other strategic relationships and any related benefits; and • The impact on our business stemming from Russia’s invasion of Ukraine.
We use words such as "anticipate," "believe," "can," "continue," "could," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors including those set forth under "Risk Factors," beginning at page 12 and elsewhere in this Form 10-K.
We use words such as "anticipate," "believe," "can," "continue," "could," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors including those set forth under "Risk Factors," beginning at page 13 and elsewhere in this Form 10-K.
We disclaim any obligation to update the information contained in any forward-looking statement. 45 Table of Contents Introduction The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this document, as well as with other sections of this Annual Report on Form 10-K, including "Item 8.
We disclaim any obligation to update the information contained in any forward-looking statement. 47 Table of Contents Introduction The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this document, as well as with other sections of this Annual Report on Form 10-K, including "Item 8.
We are subject to taxation in many jurisdictions in which we have operations. The effective tax rates that we pay in these jurisdictions vary widely, but they are generally lower than our combined U.S. federal and state effective tax rate. Our domestic blended statutory tax rate in each of fiscal 2024 and fiscal 2023 was approximately 22%.
We are subject to taxation in many jurisdictions in which we have operations. The effective tax rates that we pay in these jurisdictions vary widely, but they are generally lower than our combined U.S. federal and state effective tax rate. Our domestic blended statutory tax rate in each of fiscal 2025 and fiscal 2024 was approximately 22%.
The accounting model related to the valuation of uncertain tax positions requires us to presume that the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information and that each tax position will be evaluated without consideration of the possibility of offset or aggregation with other positions.
The accounting model related to the measurement of uncertain tax positions requires us to presume that the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information and that each tax position will be evaluated without consideration of the possibility of offset or aggregation with other positions.
We then discuss our results of operations for fiscal 2024 compared to fiscal 2023, followed by an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section titled "Liquidity and Capital Resources." Our liquidity and capital resources section generally discusses fiscal 2024 compared to fiscal 2023.
We then discuss our results of operations for fiscal 2025 compared to fiscal 2024, followed by an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section titled "Liquidity and Capital Resources." Our liquidity and capital resources section generally discusses fiscal 2025 compared to fiscal 2024.
Our non-U.S. blended statutory tax rates in fiscal 2024 and fiscal 2023 were lower than this amount. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, tax holidays, financing arrangements and other factors.
Our non-U.S. blended statutory tax rates in fiscal 2025 and fiscal 2024 were lower than this amount. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, tax holidays, financing arrangements and other factors.
We sell a large number of products to a large and diverse customer base and there was not any single product or customer that accounted for a material portion of the change in our net sales in fiscal 2024 or fiscal 2023.
We sell a large number of products to a large and diverse customer base and there was not any single product or customer that accounted for a material portion of the change in our net sales in fiscal 2025 or fiscal 2024.
These forward-looking statements include, without limitation, statements regarding the following: • The future impact on our business in response to the COVID-19 pandemic or other public health concerns; • Our expectation that we will experience period-to-period fluctuations in operating results, gross margins, product mix and average gross profit per unit; • The effects that uncertain global economic conditions and fluctuations in the global credit and equity markets may have on our financial condition and results of operations; • The effects and amount of competitive pricing pressure on our product lines and modest pricing declines in certain of our more mature proprietary product lines; • Our ability to moderate future average selling price declines; • The amount of, and changes in, demand for our products and those of our customers; • The impact of national security protections, trade restrictions and changes in tariffs, including those impacting China; • Our intent to vigorously defend our legal positions and our expectations of the impact of litigation on our operations; • Our goal to continue to be more efficient with our selling, general and administrative expenses; • Our belief that customers recognize our products and brand name and our use of distributors as an effective supply channel; • Our belief that familiarity with and adoption of development tools from us and from our third-party development tool partners will be an important factor in the future selection of our embedded control products; • The accuracy of our estimates of the useful life and values of our property, assets and other liabilities; • The possibility of future pricing fluctuations in our analog product line; • The impact of any supply disruption we may experience; • Our ability to effectively utilize our facilities at appropriate capacity levels; • Our ability to maintain manufacturing yields; • The maintenance of our competitive position based on our investments in new and enhanced products; • The cost effectiveness of using our own assembly and test operations; • Our plans to continue to transition certain outsourced assembly and test capacity to our internal facilities; • Our expectations regarding investments in our manufacturing capacity; • The continued development of the embedded control market based on our strong technical service presence; • Our anticipated level of capital expenditures; • The possibility that loss of, or disruption in the operations of, one or more of our distributors could reduce our future net sales and/or increase our inventory returns; • Our intent, including length, timing, and planned shutdown days, to reduce production levels at global fabrication facilities and its impact on inventory levels; • Our expectations regarding LTSAs, the Preferred Supply Program, and the realization of deferred revenue; • The continuation and amount of quarterly cash dividends; • The sufficiency of our existing sources of liquidity to finance anticipated capital expenditures and otherwise meet our anticipated cash requirements, and the effects that our contractual obligations are expected to have on them; • Our belief that the capital expenditures to be incurred over the next 12 months will provide sufficient manufacturing capacity to support the growth of our production capabilities for our new products and technologies and to bring in-house more of the production requirements that are currently outsourced; • Our belief that our IT system compromise has not had a material adverse effect on our business or resulted in any material damage to us; 44 Table of Contents • Our expectation that we will continue to be the target of cyber-attacks, computer viruses, unauthorized access and other attempts to breach or otherwise compromise the security of our IT systems and data; • Our plans to modify and enhance our cybersecurity risk management processes and strategy; • The impact of the resolution of legal actions on our business, and the accuracy of our assessment of the probability of loss and range of potential loss; • The amounts and timing, and our plans and expectations relating to the U.S.
These forward-looking statements include, without limitation, statements regarding the following: • Our expectation that we will experience period-to-period fluctuations in operating results, gross margins, product mix and average gross profit per unit; • The effects that uncertain global economic conditions and fluctuations in the global credit and equity markets may have on our financial condition and results of operations; • The effects and amount of competitive pricing pressure on our product lines and modest pricing declines in certain of our more mature proprietary product lines; • Our ability to moderate future average selling price declines; • The amount of, and changes in, demand for our products and those of our customers; • The impact of national security protections, trade restrictions and changes in tariffs, including those impacting China; • Our intent to vigorously defend our legal positions and our expectations of the impact of litigation on our operations; • The future impact on our business in response to public health concerns; • Our goal to continue to be more efficient with our selling, general and administrative expenses; • Our belief that customers recognize our products and brand name and our use of distributors as an effective supply channel; • Our belief that familiarity with and adoption of development tools from us and from our third-party development tool partners will be an important factor in the future selection of our embedded control products; • The accuracy of our estimates of the useful life and values of our property, assets and other liabilities; • The possibility of future pricing fluctuations in our analog product line; • The impact of any supply disruption we may experience; • Our ability to effectively utilize our facilities at appropriate capacity levels; • Our ability to maintain manufacturing yields; • The maintenance of our competitive position based on our investments in new and enhanced products; • The cost effectiveness of using our own assembly and test operations; • Our plans to continue to transition certain outsourced assembly and test capacity to our internal facilities; • Our expectations regarding investments in equipment and facilities and the timeline of expansions of our manufacturing capacity; • The continued development of the embedded control market based on our strong technical service presence; • Our anticipated level of capital expenditures; • The possibility that loss of, or disruption in the operations of, one or more of our distributors could reduce our future net sales and/or increase our inventory returns; • Our intent, including length, timing, planned closure days, to reduce production levels at global fabrication facilities, or closure of facilities completely and its impact on inventory levels and estimated cash savings; • Our expectations regarding LTSAs and the realization of deferred revenue; • The continuation and amount of quarterly cash dividends; • The sufficiency of our existing sources of liquidity to finance anticipated capital expenditures and otherwise meet our anticipated cash requirements, and the effects that our contractual obligations are expected to have on them; • Our belief that the capital expenditures to be incurred over the next 12 months will provide sufficient manufacturing capacity to support the growth of our production capabilities for our new products and technologies and to bring in-house more of the production requirements that are currently outsourced; • Our belief that our IT system compromise will not have a material adverse effect on our business or result in any material damage to us; 46 Table of Contents • Our expectation that we will continue to be the target of cyber-attacks, computer viruses, unauthorized access and other attempts to breach or otherwise compromise the security of our IT systems and data; • Our plans to modify and enhance our cybersecurity risk management processes and strategy; • The impact of the resolution of legal actions on our business, and the accuracy of our assessment of the probability of loss and range of potential loss; • The amounts and timing, and our plans and expectations relating to the U.S.
We believe that our existing sources of liquidity combined with cash generated from operations, borrowings under our Revolving Credit Facility and our 2025 Term Loan Facility, and proceeds from issuance of our Commercial Paper will be sufficient to meet our currently anticipated cash requirements for at least the next 12 months.
We believe that our existing sources of liquidity combined with cash generated from operations, borrowings under our Revolving Credit Facility and proceeds from issuance of our Commercial Paper will be sufficient to meet our currently anticipated cash requirements for at least the next 12 months.
The timing and amount of any such financing requirements will depend on a number of factors, including the maturity dates of our existing debt, our level of dividend payments, changes in tax laws and regulations regarding the repatriation of offshore cash, demand for our products, changes in industry conditions, product mix, competitive factors and our ability to identify suitable acquisition candidates.
The timing and amount of any such financing requirements will depend on a number of factors, including the maturity dates of our existing debt, our level of dividend payments on our common stock and Series A Preferred Stock, changes in tax laws and regulations regarding the repatriation of offshore cash, demand for our products, changes in industry conditions, product mix, competitive factors and our ability to identify suitable acquisition candidates.
There can be no assurance that any financing will be available on acceptable terms due to uncertainties resulting from rising interest rates, higher inflation, economic uncertainty, instability in the banking sector, public health concerns, or other factors, and any additional equity financing or convertible debt financing would result in incremental ownership dilution to our existing stockholders.
There can be no assurance that any financing will be available on acceptable terms due to uncertainties resulting from tariffs, high interest rates, high inflation, economic uncertainty, instability in the banking sector, public health concerns, or other factors, and any additional equity financing or convertible debt financing would result in incremental ownership dilution to our existing stockholders.
We apply the following five-step approach to determine the timing and amount of revenue recognition: (i) identify the contract with the customer, (ii) identify performance obligations in the contract, (iii) determine the transaction 46 Table of Contents price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the performance obligation is satisfied.
We apply the following five-step approach to determine the timing and amount of revenue recognition: (i) identify the contract with the customer, (ii) identify performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the performance obligation is satisfied.
If the threshold is met, we recognize the largest amount of the tax benefit that is more than 50% likely to be realized upon ultimate settlement. In August 2022, the U.S. government enacted the Inflation Reduction Act into law.
If the threshold is met, we recognize the largest amount of the tax benefit that is more than 50% likely to be realized upon ultimate settlement. 55 Table of Contents In August 2022, the U.S. government enacted the Inflation Reduction Act into law.
We have in the past been able to, and expect in the future to be able to, moderate average selling price declines in our mixed-signal microcontroller product lines by introducing new products with more features and higher prices. Analog Our analog product line includes analog, interface, mixed-signal and timing products.
We have in the past been able to moderate average selling price declines in our mixed-signal microcontroller product lines by introducing new products with more features and higher prices. Analog Our analog product line includes analog, interface, mixed-signal and timing products.
For our discussion of our fiscal 2023 results compared to fiscal 2022 for both our results of operations and our liquidity and capital resources sections, refer to "Item 7.
For our discussion of our fiscal 2024 results compared to fiscal 2023 for both our results of operations and our liquidity and capital resources sections, refer to "Item 7.
The loss of, or the disruption in the operations of, one or more of our distributors could reduce our future net sales in a given quarter and could result in an increase in inventory returns. At March 31, 2024, our distributors maintained 41 days of inventory of our products compared to 24 days at March 31, 2023.
The loss of, or the disruption in the operations of, one or more of our distributors could reduce our future net sales in a given quarter and could result in an increase in inventory returns. At March 31, 2025, our distributors maintained 33 days of inventory of our products compared to 41 days at March 31, 2024.
We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and expect to apply for other incentives provided by the legislation; however, there can be no assurance that we will receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position. 54 Table of Contents Financing Activities Net cash used in financing activities was $2.41 billion for fiscal 2024 compared to $3.10 billion for fiscal 2023.
We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and may apply for other incentives provided by the legislation; however, there can be no assurance that we will receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position. 56 Table of Contents Financing Activities Net cash used in financing activities was $158.3 million for fiscal 2025 compared to $2.41 billion for fiscal 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 filed with the SEC on May 25, 2023 which is incorporated by reference herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the SEC on May 23, 2024 which is incorporated by reference herein.
Amortization of Acquired Intangible Assets Amortization of acquired intangible assets in fiscal 2024 was $605.4 million compared to $669.9 million in fiscal 2023. The primary reason for the decrease in acquired intangible asset amortization was due to the use of accelerated amortization methods for assets placed in service in previous fiscal years.
Amortization of Acquired Intangible Assets Amortization of acquired intangible assets in fiscal 2025 was $490.9 million compared to $605.4 million in fiscal 2024. The primary reason for the decrease in acquired intangible asset amortization was due to the use of accelerated amortization methods for assets placed in service in previous fiscal years.
Our current intent is to increase our quarterly cash dividends depending upon market conditions, our results of operations, and potential changes in tax laws.
Our current intent is to maintain our level of quarterly cash dividends depending upon market conditions, our results of operations, and potential changes in tax laws.
Income Taxes" to our consolidated financial statements. The semiconductor industry is capital intensive and in order to remain competitive, we must constantly evaluate the need to make significant investments in capital equipment for both production and research and development and to expand our existing facilities or potentially construct new facilities.
The semiconductor industry is capital intensive and in order to remain competitive, we must constantly evaluate the need to make significant investments in capital equipment for both production and research and development and to expand our existing facilities or potentially construct new facilities.
Investing Activities Net cash used in investing activities was $392.1 million for fiscal 2024 compared to $599.5 million for fiscal 2023. Fiscal 2024 and fiscal 2023 investing cash flows primarily related to capital purchases and investments in other assets. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
Investing Activities Net cash used in investing activities was $287.8 million for fiscal 2025 compared to $392.1 million for fiscal 2024. Fiscal 2025 and fiscal 2024, investing cash flows primarily related to capital purchases and investments in other assets. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
A 1% variance in the estimated demand for our products would have changed the estimated net realizable value of our inventory by approximately $3.2 million as of March 31, 2024. Income Taxes As part of the process of preparing our consolidated financial statements, we are required to record our income taxes in each of the jurisdictions in which we operate.
A 1% variance in the estimated demand for our products would have changed the estimated net realizable value of our inventory by approximately $3.8 million as of March 31, 2025. 49 Table of Contents Income Taxes As part of the process of preparing our consolidated financial statements, we are required to record our income taxes in each of the jurisdictions in which we operate.
Pursuant to this amendment, we borrowed an aggregate principal amount of $750.0 million under the new 2025 Term Loan Facility bearing interest at the Adjusted Term SOFR Rate, plus a margin of 1.125% to 1.5%, or Alternate Base Rate, plus a margin of 0.125% to 0.5%, with a maturity date of August 31, 2025.
Pursuant to this amendment, we borrowed an aggregate principal amount of $750.0 million under the new 2025 Term Loan Facility bearing interest at the Adjusted Term SOFR Rate, plus a margin of 1.125% to 1.5%, or Alternate Base Rate, plus a margin of 0.125% to 0.5%, with a maturity date of August 31, 2025, which was repaid in full in December 2024.
With the exception of Arrow Electronics, our largest distributor, which made up 12% and 11% of our net sales in fiscal 2024 and in fiscal 2023, respectively, no other distributor or direct customer accounted for more than 10% of our net sales in fiscal 2024 or in fiscal 2023.
With the exception of Arrow Electronics, our largest distributor, which accounted for 10% and 12% of our net sales in fiscal 2025 and in fiscal 2024, respectively, no other distributor or direct customer accounted for more than 10% of our net sales in fiscal 2025 or in fiscal 2024.
Results of Operations The following table sets forth certain operational data as a percentage of net sales for fiscal 2024 and fiscal 2023: Fiscal Year Ended March 31, 2024 2023 Net sales 100.0 % 100.0 % Cost of sales 34.6 32.5 Gross profit 65.4 67.5 Research and development 14.4 13.3 Selling, general and administrative 9.6 9.5 Amortization of acquired intangible assets 7.9 7.8 Special (income) charges and other, net (0.2) — Operating income 33.7 % 36.9 % Net Sales We operate in two industry segments and engage primarily in the design, development, manufacture and sale of semiconductor products as well as the licensing of our SuperFlash and other technologies.
Results of Operations The following table sets forth certain operational data as a percentage of net sales for fiscal 2025 and fiscal 2024: Fiscal Year Ended March 31, 2025 2024 Net sales 100.0 % 100.0 % Cost of sales 43.9 34.6 Gross profit 56.1 65.4 Research and development 22.4 14.4 Selling, general and administrative 14.0 9.6 Amortization of acquired intangible assets 11.2 7.9 Special charges (income) and other, net 1.8 (0.2) Operating income 6.7 % 33.7 % Net Sales We operate in two industry segments and engage primarily in the design, development, manufacture and sale of semiconductor products as well as the licensing of our SuperFlash and other technologies.
A 100-basis point increase in the blended price concession rate would have changed the measurement of our refund liability recorded within accrued liabilities by $10.1 million. Inventories Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method.
A 100-basis point increase in the blended price concession rate would have changed the measurement of our refund liability recorded within accrued liabilities by $5.0 million as of March 31, 2025. Inventories Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method.
If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to $410.0 million. The disputed amounts largely relate to the characterization of certain assets.
If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to $410.0 million. The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
During fiscal 2024, approximately 64% of our net sales came from products that were produced at outside wafer foundries, compared to approximately 63% during fiscal 2023. This percentage may vary based on supply and demand conditions in the market.
Approximately 64% of our net sales came from products that were produced at outside wafer foundries in each of fiscal 2025 and fiscal 2024. This percentage may vary based on supply and demand conditions in the market.
Generally, adjustments will be recorded in periods subsequent to the initial recognition in light of changing facts and 47 Table of Contents circumstances, such as the closing of a tax audit, the closing of a statutory audit period or changes in applicable law.
Generally, adjustments will be recorded in periods subsequent to the initial recognition in light of changing facts and circumstances, such as the closing of a tax audit, the closing of a statutory audit period or changes in applicable law, or interactions with taxing authorities.
The primary reason for the decrease in R&D expenses in fiscal 2024 compared to fiscal 2023 was lower employee compensation costs.
The primary reasons for the decrease in R&D expenses in fiscal 2025 compared to fiscal 2024 was lower employee compensation costs.
Selling, general and administrative expenses decreased $63.5 million, or 8.0%, for fiscal 2024 compared to fiscal 2023. The primary reason for the decrease in selling, general and administrative expenses was lower employee compensation costs. Selling, general and administrative expenses fluctuate over time, primarily due to revenue and operating expense investment levels.
Selling, general and administrative expenses decreased $116.5 million, or 15.9%, for fiscal 2025 compared to fiscal 2024. The primary reason for the decrease in selling, general and administrative expenses was lower employee compensation costs. Selling, general and administrative expenses fluctuate over time, primarily due to revenue and operating expense investment levels.
Research and Development R&D expenses for fiscal 2024 were $1.10 billion, or 14.4% of net sales, compared to $1.12 billion, or 13.3% of net sales, for fiscal 2023. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies.
Research and Development R&D expenses for fiscal 2025 were $983.8 million, or 22.4% of net sales, compared to $1.10 billion, or 14.4% of net sales, for fiscal 2024. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies.
Other factors that we believe contributed to changes in our reported net sales for fiscal 2024 compared to fiscal 2023 and which are drivers of long-term trends in our net sales but which factors we are not able to quantify include: • semiconductor industry conditions; • our various new product offerings that have increased our served available market; • customers’ increasing needs for the flexibility offered by our programmable solutions; and • increasing semiconductor content in our customers’ products through our TSS product portfolio.
Other factors that we believe contributed to the decrease in our reported net sales for fiscal 2025 compared to fiscal 2024 and which are drivers of long-term trends in our net sales but which factors we are not able to quantify include: • economic and competitive conditions in the semiconductor industry; • our various new product offerings that have increased our served available market; • customers’ needs for the flexibility offered by our programmable solutions; • increasing semiconductor content in our customers’ products; and • geopolitical conditions, tariffs and other trade restrictions.
R&D expenses fluctuate over time, primarily due to revenue and operating expense investment levels. 51 Table of Contents Selling, General and Administrative Selling, general and administrative expenses for fiscal 2024 were $734.2 million, or 9.6% of net sales, compared to $797.7 million, or 9.5% of net sales, for fiscal 2023.
R&D expenses fluctuate over time, primarily due to revenue and operating expense investment levels. 53 Table of Contents Selling, General and Administrative Selling, general and administrative expenses for fiscal 2025 were $617.7 million, or 14.0% of net sales, compared to $734.2 million, or 9.6% of net sales, for fiscal 2024.
Mixed-signal microcontrollers and associated application development systems accounted for approximately 56.0% and 56.3% of our net sales in fiscal 2024 and fiscal 2023, respectively. Net sales of our mixed-signal microcontroller products decreased approximately 10.2% in fiscal 2024 compared to fiscal 2023.
Mixed-signal microcontrollers and associated application development systems accounted for approximately 51.1% and 56.0% of our net sales in fiscal 2025 and fiscal 2024, respectively. Net sales of our mixed-signal microcontroller products decreased approximately 47.3% in fiscal 2025 compared to fiscal 2024.
Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia. 50 Table of Contents Gross Profit Our gross profit in fiscal 2024 was $5.00 billion, or 65.4% of net sales, compared to $5.70 billion, or 67.5% of net sales, in fiscal 2023.
Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia. 52 Table of Contents Gross Profit Our gross profit in fiscal 2025 was $2.47 billion, or 56.1% of net sales, compared to $5.00 billion, or 65.4% of net sales, in fiscal 2024.
As of March 31, 2024, the principal amount of our outstanding indebtedness was $6.02 billion. At March 31, 2024, we had no outstanding borrowings under the Revolving Credit Facility compared to $100.0 million at March 31, 2023. At March 31, 2024, we had $1.36 billion in outstanding principal amount of Commercial Paper.
As of March 31, 2025, the principal amount of our outstanding indebtedness was $5.66 billion. We had no outstanding borrowings under the Revolving Credit Facility at March 31, 2025 and at March 31, 2024. At March 31, 2025, we had $175.0 million in outstanding principal amount of Commercial Paper compared to $1.36 billion at March 31, 2024.
R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments. R&D expenses decreased $20.9 million, or 1.9%, for fiscal 2024 compared to fiscal 2023.
R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments. R&D expenses decreased $113.6 million, or 10.4%, for fiscal 2025 compared to fiscal 2024.
Our long-term liquidity requirements primarily arise from working capital requirements, interest and principal repayments related to our outstanding indebtedness, capital expenditures, cash dividends, share repurchases, and income tax payments. For additional information regarding our cash requirements see "Note 10. Commitments and Contingencies", "Note 9. Leases", "Note 5. Debt" and "Note 55 Table of Contents 11.
Our long-term liquidity requirements primarily arise from working capital requirements, interest and principal repayments related to our outstanding indebtedness, capital expenditures, cash dividends, share repurchases, and income tax payments. For additional information regarding our cash requirements see "Note 11. Commitments and Contingencies", "Note 10. Leases", "Note 6. Debt" and "Note 12. Income Taxes" to our consolidated financial statements.
Capital expenditures were $285.1 million and $486.2 million in fiscal 2024 and fiscal 2023, respectively. Capital expenditures were primarily for the expansion of production capacity and the addition of research and development equipment.
Capital expenditures were $126.0 million and $285.1 million in fiscal 2025 and fiscal 2024, respectively. Capital expenditures were primarily for the selective expansion of production capacity and the addition of research and development equipment.
Net sales by product line for fiscal 2024 and fiscal 2023 were as follows (dollars in millions): Fiscal Year Ended March 31, 2024 % 2023 % Mixed-signal Microcontrollers $ 4,272.4 56.0 $ 4,755.7 56.3 Analog 2,016.4 26.4 2,376.9 28.2 Other 1,345.6 17.6 1,306.1 15.5 Total net sales $ 7,634.4 100.0 $ 8,438.7 100.0 Mixed-signal Microcontrollers Our mixed-signal microcontroller product line represents the largest component of our total net sales.
Net sales by product line for fiscal 2025 and fiscal 2024 were as follows (dollars in millions): Fiscal Year Ended March 31, 2025 % 2024 % Mixed-signal Microcontrollers $ 2,249.7 51.1 $ 4,272.4 56.0 Analog 1,157.0 26.3 2,016.4 26.4 Other 994.9 22.6 1,345.6 17.6 Total net sales $ 4,401.6 100.0 $ 7,634.4 100.0 Mixed-signal Microcontrollers Our mixed-signal microcontroller product line represents the largest component of our total net sales.
The primary reason for the decrease in gross profit of $545.3 million in fiscal 2024 compared to fiscal 2023 was an unfavorable net impact of sales volume, product mix and average gross profit per unit in fiscal 2024.
The primary reason for the decrease in gross profit of $2.34 billion in fiscal 2025 compared to fiscal 2024 was an unfavorable net impact of sales volume, product mix, geographic mix, and average gross profit per unit in fiscal 2025.
Sales by Geography Sales by geography for fiscal 2024 and fiscal 2023 were as follows (dollars in millions): Fiscal Year Ended March 31, 2024 % 2023 % Americas $ 2,215.4 29.0 $ 2,169.0 25.7 Europe 1,851.7 24.3 1,774.8 21.0 Asia 3,567.3 46.7 4,494.9 53.3 Total net sales $ 7,634.4 100.0 $ 8,438.7 100.0 Americas sales include sales to customers in the U.S., Canada, Central America and South America.
Sales by Geography Sales by geography for fiscal 2025 and fiscal 2024 were as follows (dollars in millions): Fiscal Year Ended March 31, 2025 % 2024 % Americas $ 1,325.7 30.2 $ 2,215.4 29.0 Europe 878.1 19.9 1,851.7 24.3 Asia 2,197.8 49.9 3,567.3 46.7 Total net sales $ 4,401.6 100.0 $ 7,634.4 100.0 Americas sales include sales to customers in the U.S., Canada, Central America and South America.
Distribution Distributors accounted for approximately 47% of our net sales in each of fiscal 2024 and fiscal 2023.
Distribution Distributors accounted for approximately 45% and 47% of our net sales in fiscal 2025 and fiscal 2024, respectively.
Special (Income) Charges and Other, Net During fiscal 2024, we earned special income and other, net of $12.3 million primarily due to the favorable resolution of a previously accrued unclaimed property audit matter partially offset by restructuring costs of acquired and existing wafer fabrication operations to increase operational efficiency.
During fiscal 2024, we earned special income and other, net of $12.3 million primarily related to a favorable resolution of a previously accrued legal matter partially offset by restructuring costs of acquired and existing wafer fabrication operations to increase operational efficiency. Restructuring expenses incurred during fiscal 2024 include $6.2 million related to the restructuring of our wafer fabrication operations.
The net impact to our gross profit from inventory reserve charges was an adverse impact of $58.4 million in fiscal 2024 compared to fiscal 2023. The gross margin impact of changes in licensing revenue, which has no associated cost of sales, was an adverse impact of $57.6 million in fiscal 2024 compared to fiscal 2023.
The net impact to our gross profit from inventory reserve charges was an adverse impact of $87.7 million in fiscal 2025 compared to fiscal 2024. The gross margin impact of changes in licensing revenue, which has no associated cost of sales, was a favorable impact of $27.7 million in fiscal 2025 compared to fiscal 2024.
Our analog product line accounted for approximately 26.4% and 28.2% of our net sales in fiscal 2024 and fiscal 2023, respectively. Net sales from our analog product line decreased approximately 15.2% in fiscal 2024 compared to fiscal 2023.
Our analog product line accounted for approximately 26.3% and 26.4% of our net sales in fiscal 2025 and fiscal 2024, respectively. Net sales from our analog product line decreased approximately 42.6% in fiscal 2025 compared to fiscal 2024.
The Subsidiary Obligors regularly sell goods and services to non-guarantor subsidiaries (Non-Guarantors) and the Subsidiary Obligors regularly purchase goods and services from Non-Guarantor through intercompany arrangements. The summarized financial information does not eliminate the effects of these intercompany arrangements and separately presents the net effect of all of the Subsidiary Obligors’ transactions with Non-Guarantor for the financial measures presented below.
The summarized financial information does not eliminate the effects of these intercompany arrangements and separately presents the net effect of all of the Subsidiary Obligors’ transactions with Non-Guarantor for the financial measures presented below.
The following table summarizes our net sales for fiscal 2024 and fiscal 2023 (dollars in millions): Fiscal Year Ended March 31, 2024 2023 Change Net sales $ 7,634.4 $ 8,438.7 (9.5) % 48 Table of Contents The decrease in net sales in fiscal 2024 compared to fiscal 2023 was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation and higher interest rates which factors resulted in many customers having higher levels of inventory.
The following table summarizes our net sales for fiscal 2025 and fiscal 2024 (dollars in millions): Fiscal Year Ended March 31, 2025 2024 Change Net sales $ 4,401.6 $ 7,634.4 (42.3) % 50 Table of Contents The decrease in net sales in fiscal 2025 compared to fiscal 2024 was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in many customers having higher levels of inventory and delaying or reducing orders.
The percentage of our assembly and test operations that are performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry, our internal capacity capabilities and our acquisition activities.
During fiscal 2025, approximately 67% of our test requirements were performed in our internal facilities, compared to approximately 71% during fiscal 2024. The percentage of our assembly and test operations that are performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry, our internal capacity capabilities and our acquisition activities.
Our effective tax rate in fiscal 2024 includes a $69.8 million tax benefit received from current year generated R&D credits, which reduced our effective tax rate by 3.0%; and a $62.9 million tax expense for the effects of foreign operations, which increased our effective tax rate by 2.7%.
Our effective tax rate in fiscal 2025 includes a $60.1 million tax benefit received from current year generated R&D credits, which reduced our effective tax rate by 154.4%; a $55.0 million tax expense for the effects of foreign operations, which increased our effective tax rate by 141.3%; and a $45.1 million tax expense related to changes in various tax reserves, which increased our effective tax rate by 115.8%. 54 Table of Contents Our effective tax rate in fiscal 2024 includes a $69.8 million tax benefit received from R&D credits, which reduced our effective tax rate by 3.0%; and a $62.9 million tax expense for the effects of foreign operations, which increased our effective tax rate by 2.7%.
Other Our other product line includes FPGA products, royalties associated with licenses for the use of our SuperFlash and other technologies, sales of our intellectual property, fees for engineering services, memory products, timing systems, manufacturing services (wafer foundry and assembly and test subcontracting), legacy application specific integrated circuits, and certain products for aerospace applications.
The non-proprietary portion of our analog product line will experience price fluctuations, driven primarily by the current supply and demand for those products. 51 Table of Contents Other Our other product line includes FPGA products, royalties associated with licenses for the use of our SuperFlash and other technologies, sales of our intellectual property, fees for engineering services, memory products, timing systems, manufacturing services (wafer foundry and assembly and test subcontracting), legacy application specific integrated circuits, and certain products for aerospace applications.
However, the overall average selling prices of our mixed-signal microcontroller products have increased in recent periods and have remained relatively stable over time due to the proprietary nature of these products.
Historically, average selling prices in the semiconductor industry decrease over the life of any particular product. However, the overall average selling prices of our mixed-signal microcontroller products have remained relatively stable in recent periods due to the proprietary nature of these products.
The Commercial Paper is sold from time to time at a discount from par or alternatively, sold at par and bears interest rates that will vary based on market conditions and the time of issuance. The outstanding Commercial Paper balance will reduce the amounts that would otherwise be available to borrow under our Revolving Credit Facility.
The Commercial Paper is sold from time to time at a discount from par or alternatively, sold at par and bears interest rates that will vary based on market conditions and the time of issuance.
In fiscal 2023, we repurchased approximately 12.9 million shares of our common stock for $945.8 million under this authorization. As of March 31, 2024, approximately $1.65 billion remained available for repurchases under the program. As of March 31, 2024, we held approximately 41.1 million shares as treasury shares.
In fiscal 2025, we repurchased approximately 1.0 million shares of our common stock for $90.0 million under this authorization. In fiscal 2024, we repurchased approximately 11.9 million shares of our common stock for $982.1 million under this authorization. As of March 31, 2025, approximately $1.56 billion remained available for repurchases under the program.
March 31, 2024 Current assets, excluding intercompany $ 470.8 Intercompany receivables from Non-Guarantors 2,665.6 Goodwill and intangible assets, net of accumulated amortization 4,619.0 Non-current assets, excluding intercompany 915.7 Non-current intercompany receivables from Non-Guarantors 186.6 Total assets $ 8,857.7 Current liabilities, excluding intercompany $ 618.1 Intercompany payables due to Non-Guarantors 5,867.6 Long-term debt 5,000.4 Non-current liabilities, excluding intercompany 1,037.7 Non-current intercompany payables due to Non-Guarantors 2,158.3 Total liabilities $ 14,682.1 56 Table of Contents Fiscal Year Ended March 31, 2024 Revenue, excluding intercompany $ 2,242.7 Revenue from Non-Guarantors 560.4 Total revenue $ 2,803.1 Gross profit, excluding intercompany 1,973.4 Gross loss from Non-Guarantors (692.9) Total gross profit $ 1,280.5 Operating income, excluding intercompany 1,419.9 Operating loss from Non-Guarantors (692.9) Total operating income $ 727.0 Net income, excluding intercompany 1,198.6 Net loss from Non-Guarantors (733.4) Total net income $ 465.2 Recently Issued Accounting Pronouncements Refer to Note 1 to our consolidated financial statements regarding recently issued accounting pronouncements.
As of March 31, 2025 As of March 31, 2024 Current assets, excluding intercompany $ 671.8 $ 470.8 Intercompany receivables from Non-Guarantors 3,527.3 2,665.6 Goodwill and intangible assets 4,586.8 4,619.0 Non-current assets, excluding intercompany 1,213.6 915.7 Non-current intercompany receivables from Non-Guarantors 181.6 186.6 Total assets $ 10,181.1 $ 8,857.7 Current liabilities, excluding intercompany $ 314.9 $ 618.1 Intercompany payables due to Non-Guarantors 6,095.1 5,867.6 Long-term debt 5,630.4 5,000.4 Non-current liabilities, excluding intercompany 959.6 1,037.7 Non-current intercompany payables due to Non-Guarantors 2,116.2 2,158.3 Total liabilities $ 15,116.2 $ 14,682.1 For the Year Ended March 31, 2025 For the Year Ended March 31, 2024 Revenue, excluding intercompany $ 1,365.3 $ 2,242.7 Revenue from Non-Guarantors 400.2 560.4 Total revenue $ 1,765.5 $ 2,803.1 Gross profit, excluding intercompany 971.0 1,973.4 Gross loss from Non-Guarantors (378.9) (692.9) Total gross profit $ 592.1 $ 1,280.5 Operating income, excluding intercompany 483.0 1,419.9 Operating loss from Non-Guarantors (378.9) (692.9) Total operating income $ 104.1 $ 727.0 Net income, excluding intercompany 210.8 1,198.6 Net loss from Non-Guarantors (402.8) (733.4) Total net income (loss) $ (192.0) $ 465.2 Recently Issued Accounting Pronouncements Refer to "Note 1.
The decrease in net sales was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation and higher interest rates which factors resulted in many customers having higher levels of inventory. Historically, average selling prices in the semiconductor industry decrease over the life of any particular product.
The decrease in net sales was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in many customers having higher levels of inventory and delaying or reducing orders.
The impact of unabsorbed capacity charges was an adverse impact of $40.7 million in fiscal 2024 compared to fiscal 2023. Unabsorbed capacity charges are expensed as incurred when we operate our manufacturing facilities below normal levels. Our overall inventory was $1.32 billion at March 31, 2024 and 2023.
The impact of unabsorbed capacity charges was an adverse impact of $132.3 million in fiscal 2025 compared to fiscal 2024. Unabsorbed capacity charges are expensed as incurred when we operate our manufacturing facilities below normal levels.
We maintained 224 days of inventory on our balance sheet at March 31, 2024 compared to 169 days of inventory at March 31, 2023. Our overall inventory level was flat as a result of our efforts to balance manufacturing production, customer demand and inventory levels. However, our days of inventory increased significantly due to lower net sales.
Our overall inventory level in dollars was generally flat as a result of our efforts to balance manufacturing production, customer demand and inventory levels. However, our days of inventory increased significantly due to lower net sales.
A quarterly dividend of $0.452 per share was declared on May 6, 2024 and will be paid on June 5, 2024 to stockholders of record as of May 22, 2024. We expect the aggregate cash dividend for the June 2024 quarter to be approximately $243.0 million.
To date, our cumulative dividend payments have totaled approximately $7.63 billion. A quarterly dividend of $0.455 per share was declared on May 8, 2025 and will be paid on June 5, 2025 to stockholders of record as of May 22, 2025. We expect the aggregate cash dividend for the June 2025 quarter to be approximately $245.1 million.
We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves.
We intend to vigorously defend our position, and we are confident in our ability to prevail on the merits. We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves.
Consistent with the slowing macroeconomic environment which began in the March 2023 quarter, we have paused most of our factory expansion actions and reduced our planned capital investments for fiscal 2025. We currently intend to invest about $175 million in equipment and facilities during the next 12 months.
Consistent with the slowing macroeconomic environment in fiscal 2025, we have paused most of our factory expansion actions and reduced our planned capital investments through fiscal 2026. Our investments in equipment and facilities during the next 12 months are expected to be at or below $100 million.
Net cash provided by operating activities was $3.62 billion in fiscal 2023 primarily due to net income of $2.24 billion, adjusted for non-cash and non-operating charges of $1.40 billion and net cash outflows of $16.0 million from changes in our operating assets and liabilities.
Operating Activities Net cash provided by operating activities was $898.1 million in fiscal 2025 primarily due to net loss of $0.5 million, adjusted for non-cash and non-operating charges of $798.5 million and net cash inflows of $100.1 million from changes in our operating assets and liabilities.
Over the past ten fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 17 days and 41 days. Inventory holding patterns at our distributors may have a material impact on our net sales. Due to the relatively high level of inventory days, we have accommodated efforts by our distributors to manage their inventory levels.
Over the past ten fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 17 days and 43 days. Inventory holding patterns at our distributors have had a material adverse impact on our net sales in recent periods.
Approximately 59% of our assembly requirements were performed in our internal assembly facilities during each of fiscal 2024 and fiscal 2023. During fiscal 2024, approximately 71% of our test requirements were performed in our internal facilities, compared to approximately 67% during fiscal 2023.
We operate assembly and test facilities in Thailand, the Philippines, and other locations throughout the world. During fiscal 2025, approximately 67% of our assembly requirements were performed in our internal assembly facilities, compared to approximately 59% during fiscal 2024.
In December 2023, we reached a Preliminary Memorandum of Terms with the U.S. Department of Commerce for $162 million in CHIPS Act grants for two of our U.S. wafer fabrication facilities. These preliminary terms are subject to a comprehensive due diligence process and continued negotiation and review and there can be no assurance that the grants will receive final approval.
Department of Commerce for $162 million in CHIPS Act grants for two of our U.S. wafer fabrication facilities; however, we have not concluded negotiations with the U.S. Department of Commerce and there can be no assurance that the grants will receive final approval.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, inventories, income taxes and contingencies.
GAAP. We review the accounting policies we use in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities.
Our inventory amounts are impacted by timing of shipment activity in the quarter, the timing of receipt of raw materials, foundry wafers, and strategic last time buy materials and completion of finished goods. We operate assembly and test facilities in Thailand, the Philippines, and other locations throughout the world.
Our inventory amounts are impacted by timing of shipment activity in the quarter, the timing of receipt of raw materials, foundry wafers, and strategic last time buy materials and completion of finished goods. We believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers.
While select investments are still being made, in the fourth quarter of fiscal 2024, we paused most of our expansion activity. In August 2022, the U.S. government enacted the CHIPS Act which is to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry.
In August 2022, the U.S. government enacted the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. In December 2023, we reached a Preliminary Memorandum of Terms with the U.S.
Liquidity and Capital Resources We had $319.7 million in cash and cash equivalents at March 31, 2024, an increase of $85.7 million from the March 31, 2023 balance.
As of March 31, 2025, the impact of GMT on our fiscal 2025 results is not material. Liquidity and Capital Resources We had $771.7 million in cash and cash equivalents at March 31, 2025, an increase of $452.0 million from the March 31, 2024 balance.
The Inflation Reduction Act did not have a material impact on our tax expense, cash taxes, or effective tax rate for the years ending March 31, 2024 and March 31, 2023. 53 Table of Contents As of March 31, 2024, 27 countries have enacted various aspects of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting Project to ensure that multinational enterprises pay a GMT.
As of March 31, 2025, 55 countries have enacted various aspects of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting Project to ensure that multinational enterprises pay a GMT. In 38 of those countries, the GMT is effective for tax years beginning in our fiscal 2025.
Consistent with the weak macroeconomic environment, most of our factory expansion activity remains paused and we have reduced our planned capital investments through fiscal 2025. We are unable to predict the timing or impact of any such slowdown on our business.
Consistent with the macroeconomic environment, most of our factory expansion activity remains paused, we have reduced our planned capital investments, and we remain focused on reducing our inventory levels and days of inventory through fiscal 2026.
The primary drivers of the changes in operating assets and liabilities in fiscal 2024 include a decrease in accounts payable due to lower spending in adverse economic conditions, decreases in accrued liabilities driven by lower accruals related to employee compensation offset by higher deferred revenue and sales related reserves, increases in other assets driven by payments for manufacturing supply capacity reservation commitments offset by increases in other liabilities due to cash collected from customers under our LTSAs, and a decrease in income tax payable, offset by a decrease in trade accounts receivable driven primarily by reduced revenue and timing of shipments and collections, and a decrease in inventories related to our efforts to balance manufacturing production, customer demand and inventory levels.
The primary drivers of the changes in operating assets and liabilities in fiscal 2025 include a decrease in trade accounts receivable driven primarily by reduced revenue and timing of shipments and collections, a decrease in inventories, offset by decreases in accrued liabilities driven by decreases in sales related reserves, and a decrease due to cash refunded to our customers under the LTSAs.

… 72 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed0 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of March 31, 2024, our current and long-term debt totaled $6.02 billion. We have no interest rate exposure to rate changes on our fixed rate debt, which totaled $5.27 billion as of March 31, 2024.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of March 31, 2025, our current and long-term debt totaled $5.66 billion, all of which was fixed rate and not subject to interest rate exposure.
However, if our costs were to continue to become subject to significant inflationary pressures, we may not be able to continue to offset such higher costs through price increases which could adversely impact our operating results.
However, if our costs were to continue to become subject to significant inflationary pressures, we may not be able to offset such higher costs through price increases which could adversely impact our operating results.
For additional information, refer to "Note 5. Debt" for a summary of our debt obligations by maturity date. Inflation Risk Inflation has not had a material adverse impact on our operating results in recent periods.
For additional information, refer to "Note 6. Debt" for a summary of our debt obligations by maturity date. Inflation Risk Inflation has not had a material adverse impact on our operating results in recent periods.
We intend to finance the repayment of a portion of our fixed rate debt maturing within the next 12 months using available borrowings under our Revolving Credit Facility, new fixed rate notes, term loans, convertible debt, Commercial Paper or other instruments at which point, changes in interest rates will have a more significant impact on our interest expense if we refinance such fixed rate debt with variable rate debt.
We intend to finance the repayment of our fixed rate debt maturing within the next 12 months using available borrowings under our Revolving Credit Facility and our Commercial Paper program or other instruments at which point, changes in interest rates will have a more significant impact on our interest expense if we refinance such fixed rate debt with variable rate debt.
Removed
We have interest rate exposure with respect to the $750.0 million of our variable interest rate debt outstanding under our 2025 Term Loan Facility, as of March 31, 2024. A 50-basis point increase in interest rates would increase our expected annual interest expense for the next 12 months by approximately $3.8 million.

Other MCHPP 10-K year-over-year comparisons