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What changed in Marvell Technology, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Marvell Technology, Inc.'s 2023 and 2024 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 2024 report.

+376 added−353 removedSource: 10-K (2024-03-13) vs 10-K (2023-03-09)

Top changes in Marvell Technology, Inc.'s 2024 10-K

376 paragraphs added · 353 removed · 269 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+31 added−26 removed50 unchanged
Biggest changeWe believe that our products comply with the current Restriction of Hazardous Substances Directive, the European legislation that restricts the use of a number of substances, including lead, and the Regulation, Evaluation and Authorization of Chemicals SVHC Substances Directive. In addition, each of our manufacturing subcontractors certifies to us compliance with ISO 14001:2004, the international standard related to environmental management.
Biggest changeIn addition, each of our manufacturing subcontractors certifies to us compliance with ISO 14001:2004, the international standard related to environmental management. We are also working to establish a “conflict-free” supply chain, including ethical sourcing of certain minerals for our products.
We seek to complement and support our direct sales force with manufacturers’ representatives for our products in North America and Europe. In addition, we have contracted with distributors who support our sales and marketing activities in the United States, Europe and Asia. We also use third-party logistics providers who maintain warehouses in close proximity to our customers’ facilities.
We seek to complement and support our direct sales force with manufacturers’ representatives for our products in North America. In addition, we have contracted with distributors who support our sales and marketing activities in the United States, Europe and Asia. We also use third-party logistics providers who maintain warehouses in close proximity to our customers’ facilities.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K and “Note 6 – Commitments and Contingencies” in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8, of this Annual Report on Form 10-K for further discussion of the risks associated with patent litigation matters.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K and “Note 6 – Commitments and Contingencies” in our Notes to Consolidated Financial Statements set forth in Part II, Item 8, of this Annual Report on Form 10-K for further discussion of the risks associated with patent litigation matters.
We believe that our ability to compete successfully in the rapidly evolving markets for our products depends on multiple factors, including, but not limited to: • the performance, features, quality and price of our products; • the development execution, timing and success of enhanced and new product introductions by us, our customers and our competitors; • the emergence, rate of adoption and acceptance of new industry standards; • market demand trends; 10 • competitive tactics; • our ability to obtain adequate foundry capacity with the appropriate technological capability; and • the number and nature of our competitors in a given market.
We believe that our ability to compete successfully in the rapidly evolving markets for our products depends on multiple factors, including, but not limited to: • the performance, features, quality and price of our products; • the development execution, timing and success of enhanced and new product introductions by us, our customers and our competitors; • the emergence, rate of adoption and acceptance of new industry standards; • market demand trends; • competitive tactics; • our ability to obtain adequate foundry capacity with the appropriate technological capability; and 10 • the number and nature of our competitors in a given market.
While our workplaces are mainly office facilities with limited safety hazards, we recognize the importance of preventing and addressing any risks that may occur. As a company, we work to prevent injury by focusing on ergonomics, employee training, maintenance, hazard reporting mechanisms and developing emergency action plans. We encourage our employees to report unsafe conditions.
While our workplaces are mainly office facilities with limited safety hazards, we recognize the importance of preventing and addressing any risks that may occur. As a company, we work to prevent injury by focusing on ergonomics, employee training, maintenance, hazard reporting mechanisms and developing emergency action plans. We encourage our employees to report unsafe conditions. 14
Our OCTEON Fusion processors have also been designed into 5G base station radio units to help enable Massive MIMO (Multiple Input Multiple Output) antenna and advanced Beamforming implementations. 6 Our NITROX security processor family provides the functionality required for Layer 3 to Layer 5 secure communication in a single chip.
Our OCTEON Fusion processors have also been designed into 5G base station radio units to help enable Massive MIMO (Multiple Input Multiple Output) antenna and advanced Beamforming implementations. Our NITROX security processor family provides the functionality required for Layer 3 to Layer 5 secure communication in a single chip.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of the risks associated with our international operations. Customers, Sales and Marketing Our target customers are original equipment manufacturers (“OEMs”) and original design manufacturers, both of which design and manufacture end market devices.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of the risks associated with our international operations. 7 Customers, Sales and Marketing Our target customers are original equipment manufacturers (“OEMs”) and original design manufacturers, both of which design and manufacture end market devices.
To help create this environment, we seek to continue to evolve our programs and resources to support employees’ mental and physical wellbeing. The COVID-19 pandemic has placed a continued emphasis on health and safety at Marvell, and we took various steps to promote the health, safety and wellness of our employees during the crisis.
To help create this environment, we seek to continue to evolve our programs and resources to support employees’ mental and physical wellbeing. 13 The COVID-19 pandemic has placed a continued emphasis on health and safety at Marvell, and we took various steps to promote the health, safety and wellness of our employees during the crisis.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of the risks associated with our intellectual property. 9 We have expended and expect to continue to expend considerable resources in establishing a patent position designed to protect our intellectual property.
See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of the risks associated with our intellectual property. We have expended and expect to continue to expend considerable resources in establishing a patent position designed to protect our intellectual property.
For information regarding our revenue by geographic area, and property and equipment by geographic area, please see “Note 15 – Segment and Geographic Information” in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.
For information regarding our revenue by geographic area, and property and equipment by geographic area, please see “Note 15 – Segment and Geographic Information” in our Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.
These single chip, custom-designed processors provide security protocol processing, encryption, authentication and compression algorithms to reduce the load on the system processor and increase total system throughput. The LiquidSecurity product family is a high-performance hardware-based transaction security solution for cloud data center and enterprise applications. It address the high-performance security requirements for private key management and administration.
These single chip, custom-designed processors provide security protocol processing, encryption, authentication and compression algorithms to reduce the load on the system processor and increase total system throughput. The LiquidSecurity product family is a high-performance hardware-based transaction security solution for cloud data center and enterprise applications. It addresses the high-performance security requirements for private key management and administration.
All of our products are compatible with standards-based operating systems and general-purpose software to enable ease of programming, and are supported by our ecosystem partners. Our OCTEON data processor units (DPUs) and multi-core infrastructure processor families provide integrated Layer 4 through 7 data and security processing with additional capabilities at Layers 2 and 3 at line speeds.
All of our products are compatible with standards-based operating systems and general-purpose software to enable ease of programming, and are supported by our ecosystem partners. Our OCTEON data processor units (“DPUs”) and multi-core infrastructure processor families provide integrated Layer 4 through 7 data and security processing with additional capabilities at Layers 2 and 3 at line speeds.
The COO is also a member of the executive-level ESG Committee, and, in that capacity, is responsible for elevating climate topics to Marvell’s senior leadership and, ultimately, to the Board’s Nominating and Governance and Audit Committees. The Nominating and Governance Committee has oversight of our climate strategy and ESG matters and receives quarterly updates on our ESG performance.
The COO is also a member of the executive-level Sustainability Committee, and, in that capacity, is responsible for elevating climate topics to Marvell’s senior leadership and, ultimately, to the Board’s Nominating and Governance and Audit Committees. The Nominating and Governance Committee has oversight of our climate strategy and sustainability matters and receives quarterly updates on our sustainability performance.
Marvell’s Chief Operations Officer (the “COO”) is the executive sponsor of the Environment Working Groups and has overall responsibility at the executive level for climate strategy and related issues. The COO is responsible for assessing and leading the management of climate-related risks and opportunities, elevating stakeholder concerns and guiding the implementation of climate-related policies, programs and disclosures.
Marvell’s Chief Operations Officer (the “COO”) is the executive sponsor of the Environment Working Group and has overall responsibility at the executive level for climate strategy and related issues. The COO is responsible for assessing and leading the management of climate-related risks and opportunities, elevating stakeholder concerns and guiding the implementation of climate-related policies, programs and disclosures.
Marvell also runs an executive-level ESG Committee to provide senior leadership and strategic guidance on ESG, as well as ESG Working Groups who are responsible for gathering data, setting strategy and goals, and supporting disclosure efforts on material ESG topics.
Marvell also runs an executive-level Sustainability Committee to provide senior leadership and strategic guidance on sustainability, as well as Sustainability Working Groups who are responsible for gathering data, setting strategy and goals, and supporting disclosure efforts on material sustainability topics.
Our marketing team works in conjunction with our field sales and application engineering force, and is organized around our product groups. 7 During fiscal 2023, 2022 and 2021, there was no net revenue attributable to a customer, other than one distributor, whose revenues as a percentage of net revenue was 10% or greater of total net revenues.
Our marketing team works in conjunction with our field sales and application engineering force, and is organized around our product groups. During fiscal 2024, 2023 and 2022, there was no net revenue attributable to a customer, other than one distributor, whose revenues as a percentage of net revenue was 10% or greater of total net revenues.
Processors We offer highly integrated semiconductors that provide single or multiple core processors, along with intelligent Layer 2 through 7 processing of the OSI (Open Systems Interconnection) stack which is the framework that governs network communications within enterprise, datacenter, storage, and carrier markets.
Processors We offer highly integrated semiconductors that provide single or multiple core processors, along with intelligent Layer 2 through 7 processing of the OSI (Open Systems Interconnection) stack which is the framework that governs network communications within enterprise, data center, storage, and carrier markets.
These products accelerate enterprise and data center applications, deliver a highly resilient infrastructure, enable greater server virtualization density along with an advanced set of data center diagnostic, orchestration and quality of service capabilities to optimize IT productivity. Our latest Fibre Channel products are well-suited for use with all-flash arrays by offering best-in-class latency and performance.
These products accelerate enterprise and data center applications, deliver a highly resilient infrastructure, enable greater server virtualization density along with an advanced set of data center diagnostic, orchestration and quality of service capabilities to optimize information technology (“IT”) productivity. Our latest Fibre Channel products are well-suited for use with all-flash arrays by offering best-in-class latency and performance.
Our current product offerings include custom Application Specific Integrated Circuits (“ASICs”), electro-optics, ethernet solutions, fibre channel adapters, processors and storage controllers. Custom ASICs We develop custom SoC (System-on-a-Chip) solutions tailored to individual customer specifications that deliver system-level differentiation for next-generation carrier, networking, data center, machine learning, automotive, aerospace and defense applications.
Our current product offerings include custom Application Specific Integrated Circuits (“ASICs”), electro-optics, ethernet solutions, fibre channel adapters, processors and storage controllers. Custom ASICs We develop custom SoC (System-on-a-Chip) solutions tailored to individual customer specifications that deliver system-level differentiation for next-generation carrier, networking, data center, artificial intelligence, automotive, aerospace and defense applications.
We work hard to attract the industry’s best talent, provide opportunities to learn and grow, and create an environment where our employees feel motivated, appreciated and engaged, and have a pathway to building a long-term career at Marvell. Our Board of Directors (the “Board”) and its committees share oversight of our human capital management strategy.
We work hard to provide opportunities to learn and grow, and create an environment where our employees feel motivated, appreciated and engaged, and have a pathway to building a long-term career at Marvell. Our Board of Directors (the “Board”) and its committees share oversight of our human capital management strategy.
The Nominating and Governance Committee has oversight of our approach to human capital and inclusion and diversity as part of its broader focus on Environmental, Social, and Governance (“ESG”). Marvell annually conducts talent reviews and succession planning and the Board receives updates regularly from senior management on succession planning, management talent assessment, attrition and employee survey results.
The Nominating and Governance Committee has oversight of our approach to human capital and inclusion and diversity as part of its broader focus on sustainability. Marvell annually conducts talent reviews and succession planning and the Board receives updates regularly from senior management on succession planning, management talent assessment, attrition and employee survey results.
In combination with our drivers, TIAs and silicon photonics, our suite of electro-optical products performs a wide range of functions such as amplifying, encoding, multiplexing, demultiplexing, and retiming signals at speeds beyond 800 Gbps. These products are key enablers for inter-connecting servers, routers, switches, storage and other infrastructure equipment that process, store and transport data traffic.
In combination with our drivers, TIAs and silicon photonics, our suite of electro-optical products performs a wide range of functions such as amplifying, encoding, multiplexing, demultiplexing, and retiming signals. These products are key enablers for inter-connecting servers, routers, switches, storage and other infrastructure equipment that process, store and transport data traffic.
Companies that compete directly with our businesses include, but are not limited to, Advanced Micro Devices, Inc.(“AMD”), Astera Labs, Inc., Broadcom Inc.(“Broadcom”), Cisco Systems, Inc.(“Cisco”), Credo Technology Group Holding Ltd, Intel Corporation, MACOM Technology Solutions Holdings, Inc., MediaTek Inc., Microchip Technology Inc., Montage Technology, Nvidia Corporation, NXP Semiconductors N.V., Phison Electronics Corporation, Qualcomm Incorporated (“Qualcomm”), Rambus, Inc., Realtek Semiconductor Corporation, Semtech Corporation, Silicon Motion Technology Corporation, and Socionext Inc.
Companies that compete directly with our businesses include, but are not limited to, Advanced Micro Devices, Inc.(“AMD”), Alchip Technologies (“Alchip”), Alphawave Semi (“Alphawave”), Astera Labs, Inc., Broadcom Inc.(“Broadcom”), Cisco Systems, Inc.(“Cisco”), Credo Technology Group Holding Ltd, Intel Corporation, Global Unichip Corporation (“GUC”), MACOM Technology Solutions Holdings, Inc., MediaTek Inc., Microchip Technology Inc., Montage Technology, Nvidia Corporation, NXP Semiconductors N.V., Phison Electronics Corporation, Qualcomm Incorporated (“Qualcomm”), Rambus, Inc., Realtek Semiconductor Corporation, Semtech Corporation, Silicon Motion Technology Corporation, and Socionext Inc.
The expiration of our patents range from 2023 to 2042, and none of the patents expiring in the near future are expected to be material to our IP portfolio as we are not substantially dependent on any single patent or group of related patents.
The expiration of our patents ranges from 2024 to 2043, and none of the patents expiring in the near future are expected to be material to our IP portfolio as we are not substantially dependent on any single patent or group of related patents.
These markets and their corresponding customer products and applications are noted in the table below: End market Customer products and applications Data center • Cloud and on-premise Artificial intelligence (AI) systems • Cloud and on-premise ethernet switching • Cloud and on-premise network-attached storage (NAS) • Cloud and on-premise servers • Cloud and on-premise storage area networks • Cloud and on-premise storage systems • Data center interconnect (DCI) Enterprise networking • Campus and small medium enterprise routers • Campus and small medium enterprise ethernet switches • Campus and small medium enterprise wireless access points (WAPs) • Network appliances (firewalls, and load balancers) • Workstations Carrier infrastructure • Broadband access systems • Ethernet switches • Optical transport systems • Routers • Wireless radio access network (RAN) systems Consumer • Broadband gateways and routers • Gaming consoles • Home data storage • Home wireless access points (WAPs) • Personal Computers (PCs) • Printers • Set-top boxes Automotive/industrial • Advanced driver-assistance systems (ADAS) • Autonomous vehicles (AV) • In-vehicle networking • Industrial ethernet switches • United States military and government solutions • Video surveillance 4 The following table summarizes net revenue disaggregated by end market (in millions, except percentages): Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Data center $ 2,408.8 41 % $ 1,784.7 40 % $ 1,040.8 35 % Enterprise networking 1,369.2 23 % 907.7 20 % 636.0 22 % Carrier infrastructure 1,084.0 18 % 820.4 18 % 599.4 20 % Consumer 701.1 12 % 700.0 16 % 574.7 19 % Automotive/industrial 356.5 6 % 249.6 6 % 118.0 4 % Total $ 5,919.6 $ 4,462.4 $ 2,968.9 We categorize revenue from our five end markets by using a number of data points, including the type of customer purchasing the product, the function of our product being sold, and our knowledge of the end customer product or application into which our product will be incorporated.
These markets and their corresponding customer products and applications are noted in the table below: End market Customer products and applications Data center • Cloud and on-premise Artificial intelligence (“AI”) systems • Cloud and on-premise ethernet switching • Cloud and on-premise network-attached storage (“NAS”) • Cloud and on-premise AI servers • Cloud and on-premise general-purpose servers • Cloud and on-premise storage area networks • Cloud and on-premise storage systems • Data center interconnect (“DCI”) Enterprise networking • Campus and small medium enterprise routers • Campus and small medium enterprise ethernet switches • Campus and small medium enterprise wireless access points (“WAPs”) • Network appliances (firewalls, and load balancers) • Workstations Carrier infrastructure • Broadband access systems • Ethernet switches • Optical transport systems • Routers • Wireless radio access network (“RAN”) systems Consumer • Broadband gateways and routers • Gaming consoles • Home data storage • Home wireless access points (“WAPs”) • Personal Computers (“PCs”) • Printers • Set-top boxes Automotive/industrial • Advanced driver-assistance systems (“ADAS”) • Autonomous vehicles (“AV”) • In-vehicle networking • Industrial ethernet switches • United States military and government solutions • Video surveillance 4 The following table summarizes net revenue disaggregated by end market (in millions, except percentages): Year Ended February 3, 2024 % of Total January 28, 2023 % of Total January 29, 2022 % of Total Data center $ 2,216.7 40 % $ 2,408.8 41 % $ 1,784.7 40 % Enterprise networking 1,228.4 22 % 1,369.2 23 % 907.7 20 % Carrier infrastructure 1,051.9 19 % 1,084.0 18 % 820.4 18 % Consumer 622.4 11 % 701.1 12 % 700.0 16 % Automotive/industrial 388.3 8 % 356.5 6 % 249.6 6 % Total $ 5,507.7 $ 5,919.6 $ 4,462.4 We categorize revenue from our five end markets by using a number of data points, including the type of customer purchasing the product, the function of our product being sold, and our knowledge of the end customer product or application into which our product will be incorporated.
To accomplish this, we intend to continue to implement design changes that lower the cost of manufacturing, assembly and testing of our products. See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of pricing risks.
To accomplish this, we intend to continue to implement design changes that lower the cost of manufacturing, assembly and testing of our products. See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of pricing risks. Sustainability We are strengthening the company by acting on our highest priority sustainability topics.
Our Inclusion and Diversity (“I&D”) approach is centered around three key aspects: • Interconnected across the company: Embedding inclusivity in every function and in everything we do • Full participation and responsibility: Empowering every employee to do their part toward creating a welcoming and inclusive environment • Globally aligned and locally relevant: Applying our global strategic framework to specific regional and local site needs Our efforts focus on four I&D business outcomes: • Activate and empower leaders • Create an inclusive best place to work • Cultivate a diverse workforce • Lead in the marketplace and community 12 Health and Safety We believe everyone deserves a safe workplace that supports their health and wellbeing.
Our Inclusion and Diversity (“I&D”) approach is centered around three key aspects: • Interconnected across the company: Embedding inclusivity in every function and in everything we do • Full participation and responsibility: Empowering every employee to do their part toward creating a welcoming and inclusive environment • Globally aligned and locally relevant: Applying our global strategic framework to specific regional and local site needs Our efforts focus on four I&D business outcomes: • Activate and empower leaders • Create an inclusive best place to work • Cultivate a diverse workforce • Lead in the marketplace and community Building a Great Place to Work The mental, emotional and physical wellbeing of our employees is a top priority for our company.
For the automotive market, we offer an automotive-grade portfolio of Brightlane Ethernet physical-layer transceivers, bridges and switches supporting speeds from 100Mbps to 10Gbps with enhanced safety and security features required for today’s and tomorrow’s in-vehicle networks.
They deliver Ethernet connectivity for enterprise-class workstations all the way up to enterprise and cloud data centers. For the automotive market, we offer an automotive-grade portfolio of Brightlane Ethernet physical-layer transceivers, bridges and switches supporting speeds from 100Mbps to 10Gbps with enhanced safety and security features required for today’s and tomorrow’s in-vehicle networks.
The Executive Compensation Committee provides oversight of our overall compensation philosophy, policies and programs, and their respective alignment with our human capital strategy. The Company employed 7,448 people as of January 28, 2023. As of January 28, 2023, our global workforce was comprised of approximately: 99.6% full time employees and 0.4% part time employees.
The Executive Compensation Committee provides oversight of our overall compensation philosophy, policies and programs, and their respective alignment with our human capital strategy. The Company employed 6,577 people as of February 3, 2024. As of February 3, 2024, our global workforce was comprised of approximately: 99% full time employees and 1% part time employees.
Environmental Management We are also subject to environmental rules and regulations in multiple jurisdictions, such as the EU Directive on Restriction of Hazardous Substances (RoHS), the EU Regulation, Evaluation and Authorization of Chemicals SVHC Substances Directive, the EU Waste Electrical and Electronic Equipment Directive (WEEE Directive), China’s regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, and California Safe Drinking Water and Toxic Enforcement Act of 1986.
Environmental Management We are also subject to environmental rules and regulations in multiple jurisdictions, such as the European Union (“EU”) Directive on Restriction of Hazardous Substances (“RoHS”), the EU Regulation, Evaluation and Authorization of Chemicals SVHC Substances Directive, the EU Waste Electrical and Electronic Equipment Directive (“WEEE Directive”), China’s regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, and California Safe Drinking Water and Toxic Enforcement Act of 1986. 9 We believe that our products comply with the current Restriction of Hazardous Substances Directive, the European legislation that restricts the use of a number of substances, including lead, and the Regulation, Evaluation and Authorization of Chemicals SVHC Substances Directive.
We have reported against the Task Force for Climate-related Financial Disclosures (“TCFD”) framework in our Fiscal Year 2022 ESG Report and have conducted scenario analysis on the potential impacts of climate change to our business in alignment with the TCFD framework. 13
We have reported against the Task Force for Climate-related Financial Disclosures (“TCFD”) framework in our fiscal 2023 ESG Report and have conducted scenario analysis on the potential impacts of climate change to our business in alignment with the TCFD framework. We have developed a 2030 Science Based Target to reduce greenhouse gas emissions across our value chain.
Our research and development efforts are directed largely to the development of high-performance analog, mixed-signal, digital signal processing and embedded microprocessor integrated circuits with the smallest die size and lowest power.
Our research and development efforts are directed largely to the development of high-performance analog, mixed-signal, digital signal processing and accelerated compute circuits based on known microprocessor architectures with highest performance and lowest power consumption.
Culture, Engagement and Development Marvell’s Core Behaviors lay the foundation of our culture and are centered around four key aspects: • Act with integrity and treat everyone with respect, • Innovate to solve customer needs, • Execute with thoroughness and rigor, and • Help others achieve their objectives.
Marvell’s Core Behaviors lay the foundation of our culture and are centered around four key aspects: • Act with integrity and treat everyone with respect, • Innovate to solve customer needs, • Execute with thoroughness and rigor, and • Help others achieve their objectives. 11 Our efforts to attract, develop, engage and retain employees, as well as our efforts to embed inclusion and diversity (“I&D”) across the Company, reinforce these behaviors.
Our Brightlane automotive Ethernet products provide the in-vehicle connectivity for key applications such as advanced driver assistance systems (ADAS), central gateways, body domain controllers, vehicle cameras, and in-vehicle infotainment. Fibre Channel Products Our QLogic Fibre Channel product family comprises of host bus adapters (HBAs) and controllers for server and storage system connectivity.
Our Brightlane automotive Ethernet products provide the in-vehicle connectivity for key applications such as advanced driver assistance systems (“ADAS”), central gateways, body domain controllers, vehicle cameras, and in-vehicle infotainment.
The OCTEON DPUs and processors are targeted for use in a wide variety of carrier, data center, and enterprise equipment, including routers, switches, security UTM appliances, content-aware switches, application-aware gateways, wireless access points, 3G/4G/5G wireless base stations, storage arrays, smart network interface controllers, network functions virtualization (NFV) and software-defined networking (SDN) infrastructure.
The OCTEON DPUs and processors are targeted for use in a wide variety of carrier, data center, and enterprise equipment, including routers, switches, security UTM appliances, content-aware switches, application-aware gateways, wireless access points, 3G/4G/5G wireless base stations, storage arrays, smart network interface controllers, network functions virtualization (“NFV”) and software-defined networking (“SDN”) infrastructure. 6 Our OCTEON Fusion family of wireless baseband infrastructure processors is a highly scalable product family supporting enterprise small cells, high capacity outdoor picocells and microcells all the way up to multi-sector macrocells for multiple wireless protocols including 5G.
Because more precise manufacturing processes are expected to lead to enhanced performance, smaller silicon chip size and lower power requirements, we continually seek to evaluate the benefits and feasibility of migrating to smaller geometry process technology in order to reduce cost and improve performance. 8 Assembly and Test We typically outsource all product packaging and testing requirements for our products in production to several assembly and test subcontractors primarily located in Taiwan, Canada, Korea, Singapore and China.
Our integrated circuits are currently fabricated in several advanced manufacturing processes. Because more precise manufacturing processes are expected to lead to enhanced performance, smaller silicon chip size and lower power requirements, we continually seek to evaluate the benefits and feasibility of migrating to smaller geometry process technology in order to reduce cost and improve performance.
Our Ethernet controllers and network adapters are optimized to accelerate and simplify data center and enterprise networking. Our family of products provide exceptional value features and performance enabling the most agile and data-intensive applications. They deliver Ethernet connectivity for enterprise-class workstations all the way up to enterprise and cloud data centers.
Our M-Gig products offer increased data rates over existing cabling infrastructure, supporting data rates beyond 1Gbps and up to 10Gbps. Our Ethernet controllers and network adapters are optimized to accelerate and simplify data center and enterprise networking. Our family of products provide exceptional value features and performance enabling the most agile and data-intensive applications.
Net revenue attributable to significant distributors whose revenues as a percentage of net revenue was 10% or greater of total net revenues is presented in the following table: Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Distributor: Distributor A 20 % 15 % 13 % Net revenue attributable to Distributor A increased due to the change of four large module makers from direct to distribution accounts to align with our support business model in Asia.
Net revenue attributable to significant distributors whose revenues as a percentage of net revenue was 10% or greater of total net revenues is presented in the following table: Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Distributor: Distributor A 24 % 20 % 15 % Net revenue attributable to Distributor A increased due to the four module makers whose business activity increased in fiscal 2024 as they were involved in supporting data center sales to hyperscale customers.
We rely on a combination of patents, copyrights, trademarks, trade secrets, contractual provisions, confidentiality agreements and licenses to protect our intellectual property. As of January 28, 2023, we have over 10,000 issued patents and pending patent applications in the United States and other countries, covering various aspects of our technology.
As of February 3, 2024, we have over 10,000 issued patents and pending patent applications in the United States and other countries, covering various aspects of our technology.
Our Ethernet switch product portfolio ranges from low-power, five-port switches to highly integrated, multi-terabit Ethernet devices that can be interconnected to form massive network solutions. We complement our Ethernet switches and infrastructure processors with a broad selection of Alaska Ethernet physical-layer transceivers for both optical and copper interconnects with advanced power management, link security, and time synchronization features.
We complement our Ethernet switches and infrastructure processors with a broad selection of Alaska Ethernet physical-layer transceivers for both optical and copper interconnects with advanced power management, link security, and time synchronization features. Our Ethernet physical-layer transceiver portfolio addresses all the critical speeds ranging from 10Mbps to 1.6Tbps including the emerging Multi-Gigabit (“M-Gig”) speeds.
Competition has intensified as a result of the increasing demand for higher levels of performance, integration and smaller process geometries. We expect competition to further intensify as current competitors strengthen the depth and breadth of their product offerings, either through in-house development or by acquiring existing technology.
We expect competition to further intensify as current competitors strengthen the depth and breadth of their product offerings, either through in-house development or by acquiring existing technology. In addition, some of our customers have chosen to develop certain semiconductor products internally and this trend may continue to proliferate.
Further, the Company periodically assesses its insurance coverage and has determined not to purchase cyber related insurance. Competition The markets for our products are intensely competitive, and are characterized by rapid technological change, evolving industry standards, frequent new product introductions and pricing pressures.
Competition The markets for our products are intensely competitive, and are characterized by rapid technological change, evolving industry standards, frequent new product introductions and pricing pressures. Competition has intensified as a result of the increasing demand for higher levels of performance, integration and smaller process geometries.
Inventory and Working Capital We typically place firm orders with our suppliers up to 52 weeks prior to the anticipated delivery date and typically prior to an order for the product.
Inventory and Working Capital We typically place firm orders with our suppliers up to 26 weeks prior to the anticipated delivery to our customer and may make further supply commitments up to 52 weeks to secure capacity. Occasionally, orders may be placed in advance of receiving a binding order from our customers.
We are also focused on incorporating functions currently provided by stand-alone integrated circuits into our integrated platform solutions to reduce our customers’ overall system costs. We have assembled a core team of engineers who have experience in the areas of complementary metal oxide semiconductor (“CMOS”) technology, digital signal processing, electro-optics, embedded microprocessors, mixed-signal circuit design, silicon photonics, and system-level architectures.
Advanced packaging techniques like Chip on Wafer on Substrate (“CoWoS”), Integrated fanout (“InFo”) along with advanced substrates, thermal solutions enable large 2.5D/3D interposers for complex accelerated compute ASICs. 8 We have assembled a core team of engineers who have experience in the areas of complementary metal oxide semiconductor (“CMOS”) technology, digital signal processing, electro-optics, embedded microprocessors, mixed-signal circuit design, silicon photonics, and system-level architectures.
However, with the start of a broad inventory correction in the semiconductor industry, supply constraints have now mostly resolved. To secure capacity over the long term, we have entered into and expect to continue to enter into capacity reservation arrangements with certain foundries and partners for substrates.
To secure capacity over the long term, we have entered into and expect to continue to enter into capacity reservation arrangements with certain foundries and substrate partners. We often maintain substantial inventories to meet short lead time orders for multi-year product runs.
These custom offerings leverage our broad portfolio of technologies being used in our standard products. Electro-optics We offer a complete portfolio of high-speed optical communication semiconductor solutions for inside cloud data centers, between cloud data centers and in carrier networks.
We have successfully executed multiple 5 nanometer (“nm”) designs in the last few years, and are progressing through 3nm designs now and investing in the advanced 2nm generation platform. Electro-optics We offer a complete portfolio of high-speed optical communication semiconductor solutions for inside cloud data centers, between cloud data centers and in carrier networks.
We are also working to establish a “conflict-free” supply chain, including ethical sourcing of certain minerals for our products. Intellectual Property Our future revenue growth and overall success depend in large part on our ability to protect our intellectual property.
Intellectual Property Our future revenue growth and overall success depend in large part on our ability to protect our intellectual property (“IP”). We rely on a combination of patents, copyrights, trademarks, trade secrets, contractual provisions, confidentiality agreements and licenses to protect our intellectual property.
Our employees sit across three geographical regions: 48.6% of employees are based in the Americas, 40.4% are in APAC (which includes India) and 11.0% are in EMEA. At Marvell, we focus on employee retention by seeking to foster an environment where people can learn, develop, and advance their careers with us over the long term.
Our employees sit across three geographical regions: 51% of employees are based in the Americas, 37% are in APAC (which includes India) and 12% are in EMEA.
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Our OCTEON Fusion family of wireless baseband infrastructure processors is a highly scalable product family supporting enterprise small cells, high capacity outdoor picocells and microcells all the way up to multi-sector macrocells for multiple wireless protocols including 5G.
Added
These custom offerings are built on our proven ASIC platform which leverages a broad suite of differentiated Marvell intellectual property including ultra-high-speed SerDes, ARM compute, security, storage, and advanced packaging, including die to die interconnects and chiplets.
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Starting in fiscal 2022 and through the first half of fiscal 2023, in response to a large increase in demand from our customers for our products in a majority of our end markets as they continued to invest in data infrastructure, our operations team continued to increase production with our global supply chain partners to alleviate supply constraints.
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Our comprehensive Ethernet switch portfolio addresses enterprise campus, enterprise data center, industrial, carrier, cloud and AI system applications. The feature-rich Prestera® switch portfolio includes silicon optimized for each market and use case, with capacities ranging from 12Gbps to 12.8Tbps. The high-bandwidth Teralynx® switch portfolio is optimized for cloud data centers, with capacities up to 51.2Tbps, and beyond.
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Our products typically have long multi-year lifecycles and we often maintain substantial inventories because the semiconductor industry is characterized by short lead time orders and quick delivery schedules.
Added
Our automotive products are being used and adopted across the broad spectrum of vehicle types: internal combustion engine (“ICE”) vehicles, battery electric vehicles (“BEVs”), plug-in hybrid electric vehicles (“PHEVs”), fuel cell electric vehicles (“FCEVs”) and traditional hybrids (“HEVs”).
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Our integrated circuits are currently fabricated in several advanced manufacturing processes.
Added
Fibre Channel Products Our QLogic Fibre Channel product family comprises of host bus adapters (“HBAs”) and controllers for server and storage system connectivity.
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Cyber Security and Information Security Risk Oversight The Company has a Cyber Security Governance Committee composed of executives and subject matter experts who meet no less than quarterly to review the Company’s information security, programs, policies, and projects. The Company’s Internal Audit Group reviews the cyber security governance and controls annually.
Added
We continue to monitor the creditworthiness of our customers and distributors and believe these distributors’ sales to diverse end customers and geographies further serve to mitigate our exposure to credit risk.
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In addition, at least quarterly the Audit Committee reviews reports on cyber security from the Chief Information Officer, the Chief Information Security Officer and other members of the Company’s management team. We regularly perform risk assessments relating to cyber security and technology risks. More specifically, an independent third party performs a quarterly penetration test of Marvell’s IT infrastructure.
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We are also focused on incorporating functions currently provided by stand-alone integrated circuits into our integrated platform solutions to reduce our customers’ overall system costs. Our portfolio of products is based on foundational intellectual property on leading edge Advanced CMOS processes in 5nm and 3nm.
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In addition to quarterly penetration testing, at least once a year, we bring in an independent third party security firm to perform additional tests and audits. Risks identified in this process are analyzed to determine the impact on the Company and the likelihood of occurrence. Such risks are continuously monitored.
Added
Our development will also include state-of-the-art improvements of available process technologies in 2nm and below geometries. Advanced packaging technologies are also critical for reducing and optimizing overall system costs.
Removed
We conduct information security training as part of our ongoing compliance program, and every employee of the Company is required to participate in such training. We install and regularly update anti-malware and endpoint detection and response (EDR software) on all IT-managed systems and workstations to detect and prevent malicious code from impacting our systems.
Added
Assembly and Test We typically outsource all product packaging and testing requirements for our products in production to several assembly and test subcontractors primarily located in Taiwan, Canada, Korea, Singapore and China.
Removed
The Company has not experienced a material security breach in the last three years, and as a result, we have not incurred any net expenses from such a breach. We have not been penalized or paid any amount under an information security breach settlement over the last three years.
Added
By integrating environmental and social considerations into our operations, supply chain and product design, we aim to deliver innovative semiconductor solutions that reduce impacts throughout our full value chain and meet customer expectations. Our sustainability initiatives are a corporate priority and strongly supported by our Board of Directors and leadership team.
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In addition, some of our customers have chosen to develop certain semiconductor products internally and this trend may continue to proliferate.
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The following sections provide an overview of Human Capital and Climate Change management. More information can be found on the Environmental, Social and Governance (“ESG”) section of our website and in our annual ESG Report.
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Human Capital We believe that attracting, retaining and motivating a workforce with the ability to support our leading position in semiconductor innovation is essential to effectively execute our strategy. Accordingly, we believe our success depends on our ability to attract, retain and motivate the highly skilled talent necessary to scale our business.
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Information contained on our website or in our annual ESG Report is not incorporated by reference into this or any other report we file with the SEC. See “Risk Factors” under Item 1A of this Annual Report on Form 10-K for a discussion of risks and uncertainties we face related to sustainability.
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We believe the people who work here are our greatest resource, and we encourage and empower all individuals employed at Marvell to excel to their greatest potential. We seek to create an environment that fuels collaboration and innovation, inspires our employees to give their best, and enables our business to thrive.
Added
Human Capital We believe that engaged and supported employees lead to innovation and collaboration, enabling our company to maintain a leadership position in our industry. Our ability to attract and retain the best talent from diverse backgrounds and establish a culture that embraces integrity, respect and inclusion is key to our goal to be a great place of work.
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We regularly monitor employee turnover, as given the nature of our business, our success depends upon highly trained personnel with the technical skills necessary to execute on our business objectives. We believe the combination of competitive compensation and career growth and development opportunities help to increase employee tenure and reduce voluntary turnover.
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Our Core Behaviors also serve as a roadmap to help integrate employees as we grow through hiring and acquisitions. Attracting and Retaining the Best Talent We continue to invest in attracting and recruiting the best talent from across the world. By developing new sourcing strategies, we are striving for continuous flow of talent, despite the competitive market in technical talent.
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Intern and entry level professional new hires are an important part of our overall talent pipeline and strategy, as students and entry level professionals often have knowledge in the latest research and innovations, and we want Marvell to benefit from that knowledge. 11 Competitive Compensation and Benefits We believe we provide comprehensive, market-competitive compensation and benefits, including affordable health and wellness coverage, globally and consider them a key priority for attracting and keeping top talent.
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Our annual internship program has been a strong source of talent for our company. We also attract a diverse workforce through our university recruiting program, which helps us hire students across all degree levels from a number of universities around the world. This strategy helps provide us with a diversity of knowledge and unique approaches to solving technological challenges.
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Each year, we benchmark our compensation and benefits programs against our industry peers to help ensure we maintain competitiveness in each of our markets. We seek to align our executives’ long-term equity compensation with our stockholders’ interests by linking realizable pay with performance.
Added
We are actively focused on retaining our people through our rewards, benefits, employee engagement and development programs, as well as by fostering an inclusive culture where our employees feel appreciated and purposeful. We are committed to offering our employees a comprehensive benefits package, competitive compensation, a range of wellness offerings, flexibility in hybrid work options and a safe work environment.
Removed
Our efforts to attract, develop, engage and retain employees, as well as our efforts to embed inclusion and diversity (“I&D”) across the Company, reinforce these behaviors. Our Core Behaviors also serve as a roadmap to help integrate employees as we grow through hiring and acquisitions.
Added
Our efforts at retention also include measuring and evaluating employee turnover rates to obtain insights into employee dissatisfaction and to influence our actions and improve our internal policies. Growing and Developing Our People At Marvell, we pride ourselves on a culture of continuous learning, where we invest in the professional growth and careers of our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

133 edited+39 added−26 removed237 unchanged
Biggest changeNational Science and Technology Council’s designation of semiconductors as a critical and emerging technology; • risks related to cancellations, rescheduling or deferrals of significant customer orders or shipments, as well as the ability of our customers to manage inventory; • risks related to the impact of the COVID-19 pandemic or other future pandemics, on the global economy and on our customers, suppliers, employees and business; • risks related to our ability to scale our business; • risks related to the extension of lead time due to supply chain disruptions, component shortages that impact the costs and production of our products and kitting process, and 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; • risks related to the ability of our customers, particularly in jurisdictions such as China that may be subject to trade restrictions (including the need to obtain export licenses) to develop their own solutions or acquire fully developed solutions from third-parties; • risks related to our ability to design, develop and introduce new and enhanced products, in particular in the 5G and Cloud markets, in a timely and effective manner, as well as our ability to anticipate and adapt to changes in technology; • risks related to our ability to successfully integrate and to realize anticipated benefits or synergies, on a timely basis or at all, in connection with our past, current, or any future acquisitions, divestitures, significant investments or strategic transactions; • risks related to our debt obligations; • risks related to the highly competitive nature of the end markets we serve, particularly within the semiconductor and infrastructure industries; • risks related to our dependence on a few customers for a significant portion of our revenue including risks related to severe financial hardship or bankruptcy or other attrition of one or more of our major customers, particularly as our major customers comprise an increasing percentage of our revenue; • risks related to our ability to execute on changes in strategy and realize the expected benefits from restructuring activities; 14 • risks related to our ability to maintain a competitive cost structure for our manufacturing, assembly, testing and packaging processes and our reliance on third parties to produce our products; • risks related to our ability to attract, retain and motivate a highly skilled workforce, especially engineering, managerial, sales and marketing personnel; • risks related to any current and future litigation, regulatory investigations, or contractual disputes with customers that could result in substantial costs and a diversion of management’s attention and resources that are needed to successfully maintain and grow our business; • risks related to gain or loss of a design win or key customer; • risks related to seasonality or volatility related to sales into the infrastructure, semiconductor and related industries and end markets; • risks related to failures to qualify our products or our suppliers’ manufacturing lines; • risks related to failures to protect our intellectual property, particularly outside the United States; • risks related to the potential impact of significant events or natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, sea level rise, and power outages), particularly in certain regions in which we operate or own buildings, such as Santa Clara, California, and where our third party manufacturing partners or suppliers operate, such as Taiwan and elsewhere in the Pacific Rim; • risks related to our Environmental, Social and Governance (ESG) programs; and • risks related to failures of our customers to agree to pay for NRE (non-recurring engineering) costs, failure to pay enough to cover the costs we incur in connection with NREs or non-payment of previously agreed NRE costs due to us.
Biggest changeNational Science and Technology Council’s designation of semiconductors as a critical and emerging technology; • risks related to cancellations, rescheduling or deferrals of significant customer orders or shipments, as well as the ability of our customers to manage inventory; • risks related to our ability to scale our business; • risks related to our debt obligations; • risks related to the ability of our customers, particularly in jurisdictions such as China that may be subject to trade restrictions (including the need to obtain export licenses) to develop their own solutions or acquire fully developed solutions from third-parties; • risks related to our ability to design, develop and introduce new and enhanced products, in particular in the 5G, Cloud and Artificial Intelligence (“AI”) markets, in a timely and effective manner, as well as our ability to anticipate and adapt to changes in technology; • risks related to our ability to successfully integrate and to realize anticipated benefits or synergies, on a timely basis or at all, in connection with our past, current, or any future acquisitions, divestitures, significant investments or strategic transactions; • risks related to the highly competitive nature of the end markets we serve, particularly within the semiconductor and infrastructure industries; • risks related to our dependence on a few customers for a significant portion of our revenue including risks related to severe financial hardship or bankruptcy or other attrition of one or more of our major customers, particularly as our major customers comprise an increasing percentage of our revenue; • risks related to our ability to execute on changes in strategy and realize the expected benefits from restructuring activities; • risks related to our ability to maintain a competitive cost structure for our manufacturing, assembly, testing and packaging processes and our reliance on third parties to produce our products; • risks related to the extension of lead time due to supply chain disruptions, component shortages that impact the costs and production of our products and kitting process, and 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; 15 • risks related to our ability to attract, retain and motivate a highly skilled workforce, especially engineering, managerial, sales and marketing personnel; • risks related to any current and future litigation, regulatory investigations, or contractual disputes with customers that could result in substantial costs and a diversion of management’s attention and resources that are needed to successfully maintain and grow our business; • risks related to gain or loss of a design win or key customer; • risks related to seasonality or volatility related to sales into the infrastructure, semiconductor and related industries and end markets; • risks related to failures to qualify our products or our suppliers’ manufacturing lines; • risks related to failures to protect our intellectual property, particularly outside the United States; • risks related to the potential impact of significant events or natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, sea level rise, and power outages), particularly in certain regions in which we operate or own buildings, such as Santa Clara, California, and where our third-party manufacturing partners or suppliers operate, such as Taiwan and elsewhere in the Pacific Rim; • risks related to our sustainability programs; • cybersecurity risks; • risks related to the impact of the COVID-19 pandemic or other future pandemics, on the global economy and on our customers, suppliers, employees and business; and • risks related to failures of our customers to agree to pay for NRE (non-recurring engineering) costs, failure to pay enough to cover the costs we incur in connection with NREs or non-payment of previously agreed NRE costs due to us.
Moreover, there are inherent risks associated with upgrading, improving and expanding our information technology systems. We cannot be sure that the expansion and improvements to our business operations will be fully or effectively implemented on a timely basis, if at all. Any failure of, or delay in, these efforts could negatively impact performance our financial results.
Moreover, there are inherent risks associated with upgrading, improving and expanding our information technology systems. We cannot be sure that the expansion and improvements to our business operations will be fully or effectively implemented on a timely basis, if at all. Any failure of, or delay in, these efforts could negatively impact performance and financial results.
The Organization for Economic Cooperation and Development (the “OECD”) has been working on a Base Erosion and Profit Shifting Project, and since 2015 has been issuing guidelines and proposals with respect to various aspects of the existing framework under which our tax obligations are determined in the countries in which we do business.
The Organization for Economic Cooperation and Development (the “OECD”) has been working on a Base Erosion and Profit Shifting Project, and since 2015 has been issuing guidelines and proposals with respect to various aspects of the existing framework under which our tax obligations are determined in countries in which we do business.
Because of the geographic concentration of these third-party foundries, as well as our assembly, testing and packaging subcontractors, we are exposed to the risk that their operations may be disrupted by regional events including, for example, droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic and future pandemics, or by political, social or economic instability, or by geopolitical tensions and conflicts.
Because of the geographic concentration of most of these third-party foundries, as well as our assembly, testing and packaging subcontractors, we are exposed to the risk that their operations may be disrupted by regional events including, for example, droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic and future pandemics, or by political, social or economic instability, or by geopolitical tensions and conflicts.
See also, “Our gross margin and results of operations may be adversely affected in the future by a number of factors, including decreases in our average selling prices of products over time, shifts in our product mix, or price increases of certain components or third-party services due to inflation, supply chain constraints, or for other reasons.” Unfavorable or uncertain conditions in the 5G and Cloud markets may cause fluctuations in our rate of revenue growth or financial results.
See also, “Our gross margin and results of operations may be adversely affected in the future by a number of factors, including decreases in our average selling prices of products over time, shifts in our product mix, or price increases of certain components or third-party services due to inflation, supply chain constraints, or for other reasons.” Unfavorable or uncertain conditions in the 5G, Cloud and AI markets may cause fluctuations in our rate of revenue growth or financial results.
Because of the geographic concentration of these suppliers, we are exposed to the risk that their operations may be disrupted by regional events including droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic, or by political, social or economic instability.
Because of the geographic concentration of some of these suppliers, we are exposed to the risk that their operations may be disrupted by regional events including droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic, or by political, social or economic instability.
In the future, these customers may decide not to purchase our products at all, purchase fewer products than they did in the past, or alter their purchasing patterns in some other way, particularly because: • a significant portion of our sales are made on a purchase order basis, which allows our customers to cancel, change or delay product purchase commitments with relatively short notice to us; • customers may purchase similar products from our competitors; • customers may discontinue sales or lose market share in the markets for which they purchase our products; • customers, particularly in jurisdictions such as China that may be subject to trade restrictions or tariffs, may develop their own solutions or acquire fully developed solutions from third-parties; or 16 • customers may be subject to severe business disruptions, including, but not limited to, those driven by recessions, financial instability, actual or threatened public health emergencies, such as the COVID-19 pandemic, other global or regional macroeconomic developments, or natural disasters.
In the future, these customers may decide not to purchase our products at all, purchase fewer products than they did in the past, or alter their purchasing patterns in some other way, particularly because: • a significant portion of our sales are made on a purchase order basis, which allows our customers to cancel, change or delay product purchase commitments with relatively short notice to us; • customers may purchase similar products from our competitors; • customers may discontinue sales or lose market share in the markets for which they purchase our products; 17 • customers, particularly in jurisdictions such as China that may be subject to trade restrictions or tariffs, may develop their own solutions or acquire fully developed solutions from third-parties; or • customers may be subject to severe business disruptions, including, but not limited to, those driven by recessions, financial instability, actual or threatened public health emergencies, such as the COVID-19 pandemic, other global or regional macroeconomic developments, or natural disasters.
CHANGES IN PRODUCT DEMAND CAN ADVERSELY AFFECT OUR FINANCIAL RESULTS We face risks related to recessions, inflation, stagflation and other economic conditions Customer demand for our products may be impacted by weak economic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility or other negative economic factors in the U.S. or other nations.
CHANGES IN PRODUCT DEMAND CAN ADVERSELY AFFECT OUR FINANCIAL RESULTS We face risks related to recessions, inflation, stagflation and other macroeconomic conditions. Customer demand for our products may be impacted by weak macroeconomic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility or other negative economic factors in the U.S. or other nations.
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet that demand which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships. We typically sell products pursuant to purchase orders rather than long-term purchase commitments.
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet demand, which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships. We typically sell products pursuant to purchase orders rather than long-term purchase commitments.
For example, during the first few quarters of fiscal year 2023 supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity and fab constraints resulted in increased lead times, inability to meet demand, and increased costs. Any increase in the price of components used in our products will adversely affect our gross margins.
For example, during the first few quarters of fiscal 2023 supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity and fab constraints resulted in increased lead times, inability to meet demand, and increased costs. Any increase in the price of components used in our products will adversely affect our gross margins.
Please see “Note 6 – Commitments and Contingencies” of our Notes to the Consolidated Financial Statements set forth in Part I, Item 1 of this Annual Report on Form 10-K for a more detailed description of any material litigation matters in which we may be currently engaged.
Please see “Note 6 – Commitments and Contingencies” of our Notes to Consolidated Financial Statements set forth in Part I, Item 1 of this Annual Report on Form 10-K for a more detailed description of any material litigation matters in which we may be currently engaged.
Our ability to adapt to changes and to anticipate future standards, and the rate of adoption and acceptance of those standards, will be a significant factor in maintaining or improving our competitive position and prospects for growth. We may also have to incur substantial unanticipated costs to comply with these new standards.
Our ability to adapt to changes and to anticipate future industry standards, and the rate of adoption and acceptance of those standards, will be a significant factor in maintaining or improving our competitive position and prospects for growth. We may also have to incur substantial unanticipated costs to comply with these new standards.
See also, “ We may be unable to protect our intellectual property, which would negatively affect our ability to compete. ” 33 From time to time, we receive and our customers receive, and we and our customers may continue to receive in the future, standards-based or other types of infringement claims, as well as claims against us and our proprietary technologies.
See also, “ We may be unable to protect our intellectual property, which would negatively affect our ability to compete. ” From time to time, we receive and our customers receive, and we and our customers may continue to receive in the future, standards-based or other types of infringement claims, as well as claims against us and our proprietary technologies.
We have in the past including in the first few quarters of fiscal year 2023, and may in the future, experience a number of industry-wide supply constraints affecting the type of high complexity products we provide for data infrastructure. These supply constraints have impacted, and are expected in the future to impact, the kitting process for our products.
We have in the past including in the first few quarters of fiscal 2023, and may in the future, experience a number of industry-wide supply constraints affecting the type of high complexity products we provide for data infrastructure. These supply constraints have impacted, and are expected in the future to impact, the kitting process for our products.
World-wide markets for our 5G and Cloud products may not develop in the manner or in the time periods we anticipate. If domestic and global economic conditions continue to worsen, overall spending on our 5G and Cloud products may be reduced, which would adversely impact demand for our products in these markets.
World-wide markets for our 5G, Cloud and AI products may not develop in the manner or in the time periods we anticipate. If domestic and global economic conditions continue to worsen, overall spending on our 5G, Cloud and AI products may be reduced, which would adversely impact demand for our products in these markets.
If we are required to make a significant payment under any of our indemnification obligations, our results of operations may be harmed. The ultimate outcome of litigation could have a material adverse effect on our business and the trading price for our securities.
If we are required to make a significant payment under any of our indemnification obligations, our results of operations may be harmed. 37 The ultimate outcome of litigation could have a material adverse effect on our business and the trading price for our securities.
Thus, if general macroeconomic conditions, or conditions in the semiconductor industry, or conditions in our customer end markets continue to deteriorate or experience a sustained period of weakness or slower growth, our business and financial results could be materially and adversely affected. 15 In addition, we are also subject to risk from inflation and increasing market prices of certain components, supplies, and commodity raw materials, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products.
Thus, if general macroeconomic conditions, or conditions in the semiconductor industry, or conditions in our customer end markets continue to deteriorate or experience a sustained period of weakness or slower growth, our business and financial results could be materially and adversely affected. 16 In addition, we are also subject to risk from inflation and increasing market prices of certain components, supplies, and commodity raw materials, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products.
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet that demand or be unable to obtain the supplies or contract manufacturing capacity to meet that demand , which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships .” 27 Changes to U.S. or foreign tax, trade policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet demand, which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships .” Changes to U.S. or foreign tax, trade policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.
If we or any of our partners experience significant delays in a future transition or fail to efficiently implement a transition, we could experience reduced manufacturing yields, delays in product deliveries and increased expenses, all of which could harm our relationships with our customers and our results of operations. 23 As smaller geometry processes become more prevalent, we expect to continue to integrate greater levels of functionality, as well as customer and third-party intellectual property, into our products.
If we or any of our partners experience significant delays in a future transition or fail to efficiently implement a transition, we could experience reduced manufacturing yields, delays in product deliveries and increased expenses, all of which could harm our relationships with our customers and our results of operations. 24 As smaller geometry processes become more prevalent, we expect to continue to integrate greater levels of functionality, as well as customer and third-party intellectual property, into our products.
Even if the 5G and Cloud markets develop in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers’ planned roll-out of 5G wireless communication systems or Cloud systems, we may miss a significant opportunity and our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Even if the 5G, Cloud and AI markets develop in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers’ planned roll-out of 5G wireless communication systems, Cloud systems, or products for the AI market, we may miss a significant opportunity and our business, financial condition, results of operations and cash flows could be materially and adversely affected.
If we need to utilize alternate manufacturing facilities, either in Taiwan or elsewhere we could experience significant expenses and delays in product shipments, which could harm our results of operations. 21 No Guarantee of Capacity or Supply The ability of each of our manufacturing partners to provide us with materials and services is limited by its available capacity and existing obligations.
If we need to utilize alternate manufacturing facilities, either in Taiwan or elsewhere we could experience significant expenses and delays in product shipments, which could harm our results of operations. 22 No Guarantee of Capacity or Supply The ability of each of our manufacturing partners to provide us with materials and services is limited by its available capacity and existing obligations.
If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue. 31 We rely on a combination of patents, copyrights, trademarks, trade secrets, contractual provisions, confidentiality agreements, licenses and other methods, to protect our proprietary technologies.
If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue. 34 We rely on a combination of patents, copyrights, trademarks, trade secrets, contractual provisions, confidentiality agreements, licenses and other methods, to protect our proprietary technologies.
We do not know whether we will be granted waivers under, or amendments to, our Credit Agreements or to the Notes Indentures if for any reason we are unable to meet these requirements, or whether we will be able to refinance our indebtedness on terms acceptable to us, or at all. 35 We may be unable to generate the cash flow to service our debt obligations.
We do not know whether we will be granted waivers under, or amendments to, our Credit Agreements or to the Notes Indentures if for any reason we are unable to meet these requirements, or whether we will be able to refinance our indebtedness on terms acceptable to us, or at all. 31 We may be unable to generate the cash flow to service our debt obligations.
Despite a wave of recent layoffs in the technology sector, competitors for talent increasingly seek to hire our employees and executive officers (for example, our former Chief Financial Officer was recently hired by another semiconductor company), and the increased availability of work-from-home arrangements has both intensified and expanded competition.
Despite a wave of recent layoffs in the technology sector, competitors for talent increasingly seek to hire our employees and executive officers (for example, our former Chief Financial Officer was hired by another semiconductor company in 2023), and the increased availability of work-from-home arrangements has both intensified and expanded competition.
Actual or perceived shortcomings with respect to our ESG initiatives, including our diversity initiatives, and reporting can impact our ability to hire and retain employees, increase our customer base, reelect our board of directors, or attract and retain certain types of investors. In addition, these parties are increasing focused on specific disclosures and frameworks related to ESG matters.
Actual or perceived shortcomings with respect to our sustainability initiatives, including our diversity initiatives, and reporting can impact our ability to hire and retain employees, increase our customer base, reelect our board of directors, or attract and retain certain types of investors. In addition, these parties are increasing focused on specific disclosures and frameworks related to sustainability matters.
These supply challenges have in the past, and may in the future, limit our ability to fully satisfy the increase in demand for some of our products.
These supply challenges have in the past, and may in the future, limit our ability to fully satisfy demand for some of our products.
Moreover, concerns that U.S. companies may not be reliable suppliers as a result of these and other actions has caused, and may in the future cause, some of our customers in China to amass large inventories of our products well in advance of need or caused some of our customers to replace our products in favor of products from other suppliers.
Moreover, concerns that U.S. companies may not be reliable suppliers as a result of the foregoing and other actions has caused, and may in the future cause, some of our customers in China to amass large inventories of our products well in advance of need or cause some of our customers to replace our products in favor of products from other suppliers.
Collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and other risks, any of which could have a material impact on us, including on our reputation and stock price.
Collecting, measuring, and reporting sustainability information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and other risks, any of which could have a material impact on us, including on our reputation and stock price.
Although we take steps to secure confidential information that is provided to third parties, such measures may not always be effective.
Although we take steps to secure our confidential information that is provided to third parties, such measures may not always be effective.
Failure to complete a pending transaction may result in negative publicity and a negative perception of us among the investment community. 20 In addition, we used a significant portion of our cash and incurred substantial indebtedness in connection with the financing of our acquisition of Inphi, which was completed in fiscal 2022.
Failure to complete a pending transaction may result in negative publicity and a negative perception of us among the investment community. 21 In addition, we used a significant portion of our cash and incurred substantial indebtedness in connection with the financing of our acquisition of Inphi, which was completed in fiscal 2022.
Litigation, regardless of the outcome, may result in significant expenditures, diversion of our management’s time and attention from the operation of our business and damage to our reputation or relationship with third parties, which could materially and adversely affect our business, financial condition, results of operations, cash flows and stock price.
Litigation, regardless of the outcome, may result in significant expenditures, diversion of our management’s time and attention from the operation of our business and damage to our reputation or relationships with third parties, which could materially and adversely affect our business, financial condition, results of operations, cash flows and stock price.
If we are unsuccessful or delayed in qualifying these products with a customer, sales of the products to the customer may be precluded or delayed, which may impede our growth and cause our business to suffer. 25 Costs related to defective products could have a material adverse effect on us.
If we are unsuccessful or delayed in qualifying these products with a customer, sales of the products to the customer may be precluded or delayed, which may impede our growth and cause our business to suffer. 26 Costs related to defective products could have a material adverse effect on us.
In addition, there can be no assurance that we will be able to accomplish our announced goals related to our ESG program, as statements regarding our ESG goals reflect our current plans and aspirations and are not guarantees that we will be able to achieve them within the timelines we announce or at all.
In addition, there can be no assurance that we will be able to accomplish our announced goals related to our sustainability program, as statements regarding our sustainability goals reflect our current plans and aspirations and are not guarantees that we will be able to achieve them within the timelines we announce or at all.
We are subject to laws and regulations worldwide, which may differ among jurisdictions, affecting our operations in areas including, but not limited to: intellectual property ownership and infringement; tax; import and export requirements; anti-corruption; foreign exchange controls and cash repatriation restrictions; conflict minerals; data privacy requirements; competition; advertising; employment; product regulations; environment, health and safety requirements; securities registration laws; and consumer laws.
We are subject to laws and regulations worldwide, which may differ among jurisdictions, affecting our operations in areas including, but not limited to: intellectual property ownership and infringement; tax; import and export requirements; anti-corruption; anti-trust; foreign exchange controls and cash repatriation restrictions; conflict minerals; data privacy requirements; competition; advertising; employment and human rights; product regulations; environment, health and safety requirements; securities registration laws; and consumer laws.
These penalties may be expensive and could harm our financial results. 22 During the first few quarters of fiscal year 2023, supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity, and specific wafer process node constraints resulted in increased lead times, inability to meet demand, and increased costs.
These penalties may be expensive and could harm our financial results. 23 During the first few quarters of fiscal 2023, supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity, and specific wafer process node constraints resulted in increased lead times, inability to meet demand, and increased costs.
As we have a broad product portfolio and diversified products with many different SKUs, significant supply chain disruptions will cause us to have more work-in-process inventories we hold to ensure we have flexibility to support our customers. If we cannot predict future customer demand or supply chain disruptions, then we may hold excess or obsolete inventory.
As we have a broad product portfolio and diversified products with many different SKUs, significant supply chain disruptions will cause us to have more work-in-process inventories that we hold to provide us with more flexibility to support our customers. If we cannot predict future customer demand or supply chain disruptions, then we may hold excess or obsolete inventory.
You should consider all of the risk factors described in our public filings when evaluating our business. • risks related to changes in general economic conditions such as economic slowdowns, inflation, stagflation, rising interest rates, and recessions or political conditions, such as the tariffs and trade restrictions with China, Russia and other foreign nations, and specific conditions in the end markets we address, including the continuing volatility in the technology sector and semiconductor industry and the U.S.
You should consider all of the risk factors described in our public filings when evaluating our business. • risks related to changes in general macroeconomic conditions such as economic slowdowns, inflation, stagflation, rising interest rates, financial institution instability, and recessions or political conditions, such as the tariffs and trade restrictions with China, Russia and other foreign nations, and specific conditions in the end markets we address, including the continuing volatility in the technology sector and semiconductor industry and the U.S.
We receive a significant amount of our revenue from a limited number of customers. For example, during fiscal 2023, we had one distributor, whose revenue as a percentage of our net revenue was 10% or greater of total net revenues.
We receive a significant amount of our revenue from a limited number of customers. For example, during fiscal 2024, we had one distributor whose revenue as a percentage of our net revenue was 10% or greater of total net revenues.
We have incurred and may in the future incur significant costs in order to implement, maintain and/or update security systems we feel are necessary to protect our information systems, or we may miscalculate the level of investment necessary to protect our systems adequately.
We have incurred and may in the future incur significant costs in order to implement, maintain and/or update security systems we believe are necessary to protect our information systems, or we may miscalculate the level of investment necessary to protect our systems adequately.
Receipt of past and future benefits under tax agreements and incentives may depend on several factors, including but not limited to, our ability to fulfill commitments regarding employment of personnel, investment, or performance of specified activities in the applicable jurisdictions as well as changes in foreign laws.
Receipt of past and future benefits under tax agreements and incentives may depend on several factors, including but not limited to, our ability to fulfill commitments regarding employment of personnel, investment, or performance of specified activities in the applicable jurisdictions as well as changes in foreign laws, including changes related to Pillar Two.
In the event of a natural disaster (such as drought, earthquake or tsunami), political or military turmoil, widespread public health emergencies including pandemics, power outages, cyber-attack or incident, or other significant disruptions to their operations, insurance may not adequately protect us from this exposure. We believe our existing insurance coverage is consistent with common practice, economic considerations and availability considerations.
In the event of a natural disaster (such as drought, earthquake or tsunami), political or military turmoil, widespread public health emergencies including pandemics, power outages, cyber-attacks or incidents, or other significant disruptions to their operations, insurance may not adequately protect us from this exposure. We believe our existing insurance coverage is consistent with common practice, economic considerations and availability considerations.
Due to the U.S. government restricting sales to certain customers in China, sales to some of our customers require licenses in order for us to export our products; however, in the past some of these licenses have been denied and there can be no assurances that requests for future licenses will be approved by the U.S. government.
Due to the U.S. government restricting sales to certain customers in China, sales to some customers require licenses for us to export our products; however, in the past some of these licenses have been delayed or denied and there can be no assurances that requests for future licenses will be approved by the U.S. government.
In addition, as a result of our recent move to a hybrid work environment, we expect to face challenges in retention of personnel who prefer to only work from home. 37 There can be no assurance that we will continue to declare cash dividends or effect stock repurchases in any particular amount or at all, and statutory requirements may require us to defer payment of declared dividends or suspend stock repurchases.
In addition, as a result of our hybrid work environment, we expect to face challenges in retention of personnel who prefer to only work from home. 39 There can be no assurance that we will continue to declare cash dividends or effect stock repurchases in any particular amount or at all, and statutory requirements may require us to defer payment of declared dividends or suspend stock repurchases.
The semiconductor industry, and specifically the storage, networking and infrastructure markets, is extremely competitive. We currently compete with a number of large domestic and international companies in the business of designing semiconductor solutions and related applications, some of which have greater financial, technical and management resources than us.
The semiconductor industry, and specifically the storage, networking, infrastructure and AI markets are extremely competitive. We currently compete with a number of large domestic and international companies in the business of designing semiconductor solutions and related applications, some of which have greater financial, technical and management resources than us.
In addition, in October 2022, the U.S. Department of Commerce Bureau of Industry and Security released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S. national security and foreign policy concerns.
In addition, the U.S. Department of Commerce Bureau of Industry and Security recently released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S. national security and foreign policy concerns.
D uring December 2022, the European Union reached agreement on the introduction of a minimum tax directive requiring member states to enact local legislation. Such proposed changes have not generally been enacted into law in most of the primary jurisdictions in which we operate.
During December 2022, the European Union reached agreement on the introduction of a minimum tax directive requiring member states to enact local legislation. Such proposed changes have not generally been enacted into law in most of the primary jurisdictions in which we operate.
In addition, as a result of the fact that the markets for 5G and Cloud are still developing, demand for these products may be unpredictable and may vary significantly from one period to another. See also, “Our sales are concentrated in a few large customers.
In addition, as a result of the fact that the markets for 5G, Cloud, and AI are still emerging, demand for these products may be unpredictable and may vary significantly from one period to another. See also, “Our sales are concentrated in a few large customers.
See also, “We rely on our manufacturing partners for the manufacture, assembly, testing and packaging of our products, and the failure of any of these third-party vendors to deliver products or otherwise perform as requested could damage our relationships with our customers, decrease our sales and limit our ability to grow our business” for additional information on the impacts of supply chain cross-dependencies on our business.
See also, “We rely on our manufacturing partners for the manufacture, assembly, testing and packaging of our products, and the failure of any of these third-party vendors to deliver products or otherwise perform as requested or to be able to fulfill our orders could damage our relationships with our customers, decrease our sales and limit our ability to grow our business” for additional information on the impacts of supply chain cross-dependencies on our business.
See also, “ Cyber security risks could adversely affect our business and disrupt our operations. ” If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue.
See also, “ Cybersecurity risks could adversely affect our business and disrupt our operations. ” If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue.
Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures. 36 Our business also requires it to share confidential information with manufacturing partners, suppliers and other third parties.
Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures. Our business also requires us to share confidential information with manufacturing partners, suppliers, customers and other third parties.
Consequently, we may not fully realize our expectations for custom or semi-custom product revenue and our operating results may be adversely affected. 24 Additionally, failure of our customers to agree to pay for NRE (non-recurring engineering) costs or failure to pay enough to cover the costs we incur in connection with NREs, or non-payment of previously agreed NRE costs due to us, can harm our financial results.
Consequently, we may not fully realize our expectations for custom or semi-custom product revenue and our operating results may be adversely affected. 25 Additionally, failure of our customers to agree to pay for NRE costs or failure to pay enough to cover the costs we incur in connection with NREs, or non-payment of previously agreed NRE costs due to us, can harm our financial results.
Immaterial data breaches, losses or other unauthorized access to or releases of confidential information have in the past occurred with third parties and material data breaches, losses or other unauthorized access to or releases of confidential information may in the future occur in connection with third parties and could materially adversely affect our reputation, financial condition and operating results and could result in liability or penalties under data privacy laws.
Data breaches, losses or other unauthorized access to or releases of confidential information have in the past occurred with these third parties and material data breaches, losses or other unauthorized access to, or releases of, our confidential information may in the future occur in connection with third-party breaches that could materially adversely affect our reputation, financial condition and operating results and could result in liability or penalties under data privacy laws.
Environmental legislation, such as the EU Directive on Restriction of Hazardous Substances (RoHS), the EU Waste Electrical and Electronic Equipment Directive (WEEE Directive) and China’s regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, may increase our cost of doing business internationally and impact our revenues from the EU, China and other countries with similar environmental legislation as we endeavor to comply with and implement these requirements.
Environmental legislation, such as the EU Directive on Restriction of Hazardous Substances (“RoHS”), the EU Waste Electrical and Electronic Equipment Directive (“WEEE Directive”) and China’s regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, may increase our cost of doing business internationally and impact our revenues from the EU, China and other countries with similar environmental legislation as we endeavor to comply with and implement these requirements.
WE ARE SUBJECT TO CYBER SECURITY RISKS Cyber security risks could adversely affect our business and disrupt our operations. We depend heavily on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business.
WE ARE SUBJECT TO CYBERSECURITY RISKS Cybersecurity risks could adversely affect our business and disrupt our operations. We depend heavily on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business.
If we lose or experience a significant reduction in sales to any of these key customers, if any of these key customers experience a significant decline in market share, or if any of these customers experience significant financial difficulties, our revenue may decrease substantially and our results of operations and financial condition may be harmed.” See also, “Adverse changes in the political and economic policies of the U.S. government in connection with trade with China have reduced the demand for our products and damaged our business” for additional risks related to export restrictions that may impact certain customers in the 5G and Cloud markets.
If we lose or experience a significant reduction in sales to any of these key customers, if any of these key customers experience a significant decline in market share, or if any of these customers experience significant financial difficulties, our revenue may decrease substantially and our results of operations and financial condition may be harmed.” See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business” for additional risks related to export restrictions that may impact certain customers in the 5G, Cloud and AI markets.
We also evaluate the costs of migrating to smaller geometry process technologies including both actual costs such as increased mask costs and wafer costs and increased costs related to EDA tools and the opportunity costs related to the technologies we choose to forego.
We also evaluate the costs of migrating to smaller geometry process technologies including both actual costs such as increased mask costs and wafer costs and increased costs related to EDA (electronic design automation) tools and the opportunity costs related to the technologies we choose to forego.
If we cannot retain or attract distributors or manufacturers’ representatives, or if any of our distributors or manufacturer’s representatives are unsuccessful in marketing and selling our products or terminate their relationships with us, our sales and results of operations will be harmed. 26 WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS Adverse changes in the political and economic policies of the U.S. government in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business.
If we cannot retain or attract distributors or manufacturers’ representatives, or if any of our distributors or manufacturer’s representatives are unsuccessful in marketing and selling our products or terminate their relationships with us, our sales and results of operations will be harmed. 27 WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business.
See also, “ Adverse changes in the political and economic policies of the U.S. government in connection with trade with China have reduced the demand for our products and damaged our business” and "Changes in existing taxation benefits, rules or practices may adversely affect our financial results .” We face additional risks due to the extent of our global operations since a majority of our products, and those of many of our customers, are manufactured and sold outside of the United States.
See also, “ Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business” and "Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results .” We face additional risks due to the extent of our global operations since a majority of our products, and those of many of our customers, are manufactured and sold outside of the United States.
Increasingly regulators (including the U.S. Securities and Exchange Commission), customers, investors, employees and other stakeholders are focusing on Environmental, Social and Governance (ESG) matters. While we have certain ESG initiatives at the Company there can be no assurance that regulators, customers, investors, and employees will determine that these programs are sufficiently robust.
Increasingly regulators (including the U.S. Securities and Exchange Commission), customers, investors, employees and other stakeholders are focusing on sustainability matters. While we have certain sustainability initiatives at the Company there can be no assurance that regulators, customers, investors, and employees will determine that these programs are sufficiently robust.
In addition, we may be unable to negotiate as favorable terms with larger customers whether those customers resulted from customer consolidation, merger integrations or other reasons, and any such less favorable terms could harm our business and our results of operations. We are subject to order and shipment uncertainties.
In addition, we may be unable to negotiate as favorable terms with larger customers whether those customers resulted from customer consolidation, merger integrations or other reasons, and any such less favorable terms could harm our business and our results of operations.
These information technology systems are subject to damage or interruption from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, internal malfeasance or other events.
These information technology systems are subject to damage or interruption from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, nation state advanced persistent threats, internal malfeasance or other events.
For example, addition of companies to the Entity List, which places export restrictions on certain foreign persons or entities by the U.S. Department of Commerce’s Bureau of Industry and Security, has dampened demand for our products, adding to the already challenging macroeconomic environment.
For example, the addition of certain companies to the Entity List, which places export restrictions on certain foreign persons or entities by the U.S. Department of Commerce’s Bureau of Industry and Security, has dampened demand for our products.
Our third-party manufacturing partners, suppliers, distributors, sub-contractors and customers have been, and may continue to be, disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work; office and factory closures; disruptions to ports and other shipping infrastructure; border closures; and other travel or health-related restrictions.
Our third-party manufacturing partners, suppliers, distributors, sub-contractors and customers were disrupted by worker absenteeism, quarantines and restrictions on their employees’ ability to work; office and factory closures; disruptions to ports and other shipping infrastructure; border closures; and other travel or health-related restrictions.
Regulatory activity, such as tariffs, export controls, economic sanctions and vigorous enforcement of U.S. export controls and economic sanctions laws have in the past and may continue to materially limit our ability to make sales to our significant customers in China, which has in the past and may continue to harm our results of operations, reputation and financial condition.
Regulatory activity, such as tariffs, export controls and sanctions, economic sanctions and related laws have in the past and may continue to materially limit our ability to make sales to customers in China, which has in the past and may continue to harm our results of operations, reputation and financial condition.
In 2021, the OECD announced that more than 140 member jurisdictions (including the United States, Singapore, and Bermuda) have politically committed to potential changes to the international corporate tax system, including enacting a minimum tax rate of at least 15%.
In 2021, the OECD announced that more than 140 member jurisdictions (including the United States, Singapore, and Bermuda) have politically committed to potential changes to the international corporate tax system, including enacting a minimum tax rate of at least 15% as part of the OECD’s “Pillar Two” initiative.
Although the pandemic related restrictions above have eased in many places, the ongoing pandemic, including large outbreaks, resurgences of COVID-19 in various regions and appearances of new variants of the virus, has resulted, and may continue to result, in their full or partial reinstitution.
Although the pandemic related restrictions above have eased in most places, resurgences of COVID-19 in various regions and appearances of new variants of the virus, has resulted, and may continue to result, in their full or partial reinstitution.
Accordingly, we are subject to risks associated with international operations, including: • actual or threatened public health emergencies such as the COVID-19 pandemic on our operations, employees, customers and suppliers; • political, social and economic instability, military hostilities including invasions, wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions; • volatile global economic conditions, including downturns or recessions in which some competitors may become more aggressive in their pricing practices, which would adversely impact our gross margin; • compliance with domestic and foreign export and import regulations, including pending changes thereto, and difficulties in obtaining and complying with domestic and foreign export, import and other governmental approvals, permits and licenses; • local laws and practices that favor local companies, including business practices that are prohibited by the U.S.
Accordingly, we are subject to risks associated with international operations, including: • political, social and economic instability, military hostilities including invasions, wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions; • volatile global economic conditions, including downturns or recessions in which some competitors may become more aggressive in their pricing practices, which would adversely impact our gross margin; 29 • compliance with domestic and foreign export and import regulations, including any pending changes thereto, and difficulties in obtaining and complying with domestic and foreign export, import and other governmental approvals, permits and licenses; • local laws and practices that favor local companies, including business practices that are prohibited by the U.S.
The competition for qualified personnel with significant experience in the management, design, development, manufacturing, marketing and sales of semiconductor solutions has been intense over the last few years, both in the Silicon Valley where our U.S. operations are based and in global markets in which we operate.
The competition for qualified personnel with significant experience in the management, design, development, manufacturing, marketing and sales of semiconductor solutions has been intense over the last few years, both in the Silicon Valley and in global markets in which we operate.
As a result, we have had to, and expect in the future to continue to need to, appropriately scale our business, internal systems and organization, and to continue to improve our operational, financial and management controls, reporting systems and procedures, to serve our growing customer base.
Over the last few years, we have rapidly increased in size. As a result, we have had to, and expect in the future to continue to need to, appropriately scale our business, internal systems and organization, and to continue to improve our operational, financial and management controls, reporting systems and procedures, to serve our growing customer base.
Our business has been, and may continue to be, adversely impacted by the effects of the COVID-19 pandemic or other future pandemics. In addition to global and domestic macroeconomic effects, during fiscal years 2022 and 2023 the COVID-19 pandemic and related adverse public health measures caused disruption to our global operations and sales.
Our business was adversely impacted by the effects of the COVID-19 pandemic and may be similarly adversely impacted by future pandemics. In addition to global and domestic macroeconomic effects, during fiscal 2022 and fiscal 2023 the COVID-19 pandemic and related adverse public health measures caused disruption to our global operations and sales.
Therefore, the income from all foreign subsidiaries is now subject to the U.S. provisions applicable to Global Intangible Low Taxed Income (“GILTI”), which generally requires GILTI income to be included in the taxable income of U.S. entities. The U.S. currently has a federal corporate tax rate of 21%.
As such, the income from all of our foreign subsidiaries has been subject to the U.S. tax provisions applicable to Global Intangible Low Taxed Income (“GILTI”), which generally requires that GILTI income be included in the taxable income of U.S. entities. The U.S. currently has a federal corporate tax rate of 21%.
In addition, while many of our customers are subject to purchase orders or other agreements that do not allow for cancellation, there can be no assurance that these customers will honor these contract terms and cancellation of these orders may adversely affect our business operations and demand forecast which is the basis for us to have products made.
In addition, while many of our customers are subject to purchase orders or other agreements that do not allow for cancellation, there can be no assurance that these customers will honor these contract terms and cancellation of these orders may adversely affect our business operations and demand forecast which is the basis for us to have products made. 18 Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies.
As of January 28, 2023, there was $449.5 million remaining available for future stock repurchases under the authorization. Our indemnification obligations and limitations of our director and officer liability insurance may have a material adverse effect on our financial condition, results of operations and cash flows.
As of February 3, 2024, there was $299.5 million remaining available for future stock repurchases under the prior authorization. Our indemnification obligations and limitations of our director and officer liability insurance may have a material adverse effect on our financial condition, results of operations and cash flows.
To the extent that any system failure, accident or security breach results in material disruptions or interruptions to our operations, or those of our customers, suppliers and manufacturing and other business partners, or the theft, loss or disclosure of, or damage to our data or confidential information, including our intellectual property, our reputation, business, results of operations and/or financial condition could be materially adversely affected.
To the extent that any system failure, accident or security breach results in material disruptions or interruptions to our operations, or those of our customers, suppliers and manufacturing and other business partners, or the theft, loss or disclosure of, or damage to our data or confidential information, including our intellectual property, our reputation, business, results of operations and/or financial condition could be materially adversely affected. 38 GENERAL RISK FACTORS We depend on highly skilled personnel to support our business operations.
Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies. Due to cross dependencies, supply chain disruptions have in the past and may in the future negatively impact the demand for our products. We have a limited ability to predict the timing of a supply chain correction.
Due to cross dependencies, supply chain disruptions have in the past and may in the future negatively impact the demand for our products. We have a limited ability to predict the timing of a supply chain correction.
See also, “Research and Development” under Results of Operations. If we are unable to develop and introduce new and enhanced products that achieve market acceptance in a timely and cost-effective manner, our results of operations and competitive position will be harmed.
See also, “Research and Development” under Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If we are unable to develop and introduce new and enhanced products that achieve market acceptance in a timely and cost-effective manner, our results of operations and competitive position will be harmed.
For example, NVIDIA Corporation acquired Mellanox Technologies in April 2020, Infineon acquired Cypress Semiconductors in April 2020, Renesas Electronics Corporation acquired Dialog Semiconductor in August 2021, AMD acquired Xilinx, Inc. in February 2022 and Pensando Systems in May 2022 and Qualcomm acquired Veonner in 2022.
For example, NVIDIA Corporation acquired Mellanox Technologies in April 2020, Infineon acquired Cypress Semiconductors in April 2020, Renesas Electronics Corporation acquired Dialog Semiconductor in August 2021, Analog Devices acquired Maxim Integrated Products in 2021, AMD acquired Xilinx, Inc. in February 2022 and Pensando Systems in May 2022, Qualcomm acquired Veonner in April 2022, and Broadcom acquired VMware in November 2023.
The terms of the new notes issued in the exchange offers are substantially identical to the Notes, except that the new notes are registered under the Securities Act of 1933 and the transfer restrictions and registration rights applicable to the Notes do not apply to the new notes. 34 Our indebtedness could have important consequences to us including: • increasing our vulnerability to adverse general economic and industry conditions; • requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts, execution of our business strategy, acquisitions and other general corporate purposes; • limiting our flexibility in planning for, or reacting to, changes in the economy and the semiconductor industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • exposing us to interest rate risk to the extent of our variable rate indebtedness, particularly in the current environment of rising interest rates; and • making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes.
Our indebtedness could have important consequences to us including: • increasing our vulnerability to adverse general economic and industry conditions; 30 • requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts, execution of our business strategy, acquisitions and other general corporate purposes; • limiting our flexibility in planning for, or reacting to, changes in the economy and the semiconductor industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness; • exposing us to interest rate risk to the extent of our variable rate indebtedness, particularly in the current environment of rising interest rates; and • making it more difficult to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures and other purposes.
If we are unable to increase the number of large customers in key markets, then our operating results in the foreseeable future would be expected to continue to depend on sales to a relatively small number of customers, as well as the ability of these customers to sell products that incorporate our products.
See also, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Sales and Customer Composition. ” If we are unable to increase the number of large customers in key markets, then our operating results in the foreseeable future would be expected to continue to depend on sales to a relatively small number of customers, as well as the ability of these customers to sell products that incorporate our products.
Such U.S. holder could also be subject to a special interest charge with respect to any such gain or excess distribution. 38 A non-U.S. entity would be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% of its gross income is passive income or (ii) on average, the percentage of its assets that produce passive income or are held for the production of passive income is at least 50% (determined on an average gross value basis).
A non-U.S. entity would be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75% of its gross income is passive income or (ii) on average, the percentage of its assets that produce passive income or are held for the production of passive income is at least 50% (determined on an average gross value basis).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table presents the approximate square footage of our significant owned and leased facilities as of January 28, 2023: (Square Feet) Locations Primary Use Owned Facilities Leased Facilities (1) United States Research and design, sales and marketing, administration and operations 983,000 692,000 India Research and design — 263,000 Israel Research and design — 220,000 Taiwan Research and design — 98,000 Singapore Operations, and research and design — 60,000 Canada Research and design — 56,000 China Research and design, and sales and marketing 116,000 46,000 Total 1,099,000 1,435,000 (1) Lease terms expire in various years from 2023 through 2032; provided, however, that we have the option to extend certain leases past the current lease term.
Biggest changeProperties The following table presents the approximate square footage of our significant owned and leased facilities as of February 3, 2024: (Square Feet) Locations Primary Use Owned Facilities Leased Facilities (1) United States Research and design, sales and marketing, administration and operations 983,000 439,000 India Research and design — 313,000 Israel Research and design — 291,000 Taiwan Research and design — 94,000 Singapore Operations, and research and design — 71,000 Canada Research and design — 56,000 China Research and design, and sales and marketing 116,000 16,000 Total 1,099,000 1,280,000 (1) Lease terms expire in various years from 2024 through 2037; provided, however, that we have the option to extend certain leases past the current lease term.
We have ceased-use lease facilities and subleased facilities of approximately 283,000 square feet in the United States that are excluded from the table above. We also lease smaller facilities in various international locations, which are occupied by administrative, sales, design and field application personnel.
We have ceased-use lease facilities and subleased facilities of approximately 323,000 square feet in the United States that are excluded from the table above. We also lease smaller facilities in various international locations, which are occupied by administrative, sales, design and field application personnel.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information set forth under “Note 6 – Commitments and Contingencies” in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.
Biggest changeItem 3. Legal Proceedings The information set forth under “Note 6 – Commitments and Contingencies” in our Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. For a discussion of certain risks associated with legal proceedings, please see Part I, Item 1A, “Risk Factors” above.
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For a discussion of certain risks associated with legal proceedings, please see Part I, Item 1A, “Risk Factors” above. Item 4. Mine Safety Disclosures Not Applicable. 39 PART II
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Item 4. Mine Safety Disclosures Not Applicable. 43 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns. 2/3/2018 2/2/2019 2/1/2020 1/30/2021 1/29/2022 1/28/2023 Marvell Technology, Inc.** 100.00 83.15 109.69 236.42 305.88 205.15 S&P 500 100.00 99.94 121.49 142.45 172.36 160.94 PHLX Semiconductor 100.00 99.56 141.14 231.43 267.92 242.36 **Information prior to April 20, 2021 is for Marvell Technology Group, Ltd. 40 Dividends Our Board of Directors declared quarterly cash dividends of $0.06 per share payable to holders of our common stock in each quarter of fiscal 2023, 2022 and 2021.
Biggest changeStockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns. 2/2/2019 2/1/2020 1/30/2021 1/29/2022 1/28/2023 2/3/2024 Marvell Technology, Inc.** $ 100.00 $ 131.92 $ 284.34 $ 367.87 $ 246.73 $ 378.29 S&P 500 100.00 121.56 142.53 172.46 161.03 199.42 PHLX Semiconductor 100.00 141.76 232.45 269.10 243.43 363.11 **Information prior to April 20, 2021 is for Marvell Technology Group, Ltd.
Our stock repurchase program is subject to market conditions, legal restrictions and regulations, and other factors, and does not obligate the Company to repurchase any dollar amount or number of shares of its common stock and the repurchase program may be extended, modified, suspended or discontinued at any time. Item 6. Reserved 41
Our stock repurchase program is subject to market conditions, legal restrictions and regulations, and other factors, and does not obligate the Company to repurchase any dollar amount or number of shares of its common stock and the repurchase program may be extended, modified, suspended or discontinued at any time. Item 6. Reserved 45
The graph compares a $100 investment on February 3, 2018 in our common stock with a $100 investment on February 3, 2018 in each index and assumes that any dividends were reinvested.
The graph compares a $100 investment on February 2, 2019 in our common stock with a $100 investment on February 2, 2019 in each index and assumes that any dividends were reinvested.
Pursuant to this transaction, 439,499 shares of Marvell common stock were issued, which shares are subject to forfeiture in some circumstances. The shares of Marvell common stock were issued in a private placement pursuant to Rule 4(a)(2) of the Securities Act.
Pursuant to this transaction, 439,499 shares of Marvell common stock were issued, which shares are subject to forfeiture in some circumstances. The shares of Marvell common stock were issued in a private placement pursuant to Rule 4(a)(2) of the Securities Act. There were no sales of unregistered equity securities during fiscal 2024.
As of March 2, 2023, the approximate number of record holders of our common stock was 590 (not including beneficial owners of stock held in street name).
As of March 6, 2024, the approximate number of record holders of our common stock was 563 (not including beneficial owners of stock held in street name).
The graph below compares the cumulative total stockholder return of our common stock with the cumulative total return of the S&P 500 Index and the Philadelphia Semiconductor Index since February 3, 2018 through January 28, 2023.
The graph below compares the cumulative total stockholder return of our common stock with the cumulative total return of the S&P 500 Index and the Philadelphia Semiconductor Index (“PHLX”) since February 2, 2019 through February 3, 2024.
Future payment of a regular quarterly cash dividend on the Company’s common stock will be subject to, among other things, the best interests of the Company and its stockholders, the Company’s results of operations, cash balances and future cash requirements, financial condition, developments in ongoing litigation, statutory requirements under Delaware law and other factors that our Board of Directors may deem relevant.
As a result, we paid total cash dividends of $206.8 million in fiscal 2024, $204.4 million in fiscal 2023, and $191.0 million in fiscal 2022. 44 Future payment of a regular quarterly cash dividend on the Company’s common stock will be subject to, among other things, the best interests of the Company and its stockholders, the Company’s results of operations, cash balances and future cash requirements, financial condition, developments in ongoing litigation, statutory requirements under Delaware law and other factors that our Board of Directors may deem relevant.
Issuer Purchases of Equity Securities We resumed our stock repurchase program in the first quarter of fiscal 2023, which had been temporarily suspended in fiscal 2021 to preserve cash during the COVID-19 pandemic. We did not purchase any shares of our common stock for the three months ended January 28, 2023.
Issuer Purchases of Equity Securities We resumed our stock repurchase program in the first quarter of fiscal 2023, which had been temporarily suspended in fiscal 2021 to preserve cash during the COVID-19 pandemic.
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As a result, we paid total cash dividends of $204.4 million in fiscal 2023, $191.0 million in fiscal 2022, and $160.6 million in fiscal 2021.
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Dividends Our Board of Directors declared quarterly cash dividends of $0.06 per share payable to holders of our common stock in each quarter of fiscal 2024, 2023 and 2022.
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We have $449.5 million of repurchase authority remaining under our current share repurchase program.
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The following table presents details of our stock repurchases during the three months ended February 3, 2024 (in millions, except per share data): Period (1) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs (2) October 29, 2023 to November 25, 2023 — $ — — $ 399.5 November 26, 2023 to December 23, 2023 — $ — — $ 399.5 December 24, 2023 to February 3, 2024 1.6 $ 62.72 1.6 $ 299.5 Total 1.6 $ 62.72 1.6 (1) The monthly periods presented above for the three months ended February 3, 2024, are based on our fiscal accounting periods which followed a 4-4-6 week fiscal accounting period for the three months ended February 3, 2024.
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(2) On November 17, 2016, we announced that our Board of Directors had authorized a $1.0 billion stock repurchase plan with no fixed expiration. The stock repurchase program replaced in its entirety the prior $3.3 billion stock repurchase program.
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On October 16, 2018, we announced that our Board of Directors authorized a $700.0 million addition to the balance of our existing stock repurchase plan. Our existing stock repurchase program had approximately $304.0 million of repurchase authority remaining as of October 16, 2018 prior to the approved addition.
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We intend to effect stock repurchases in accordance with the conditions of Rule 10b-18 under the Exchange Act, but may also make repurchases in the open market outside of Rule 10b-18 or in privately negotiated transactions.
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The stock repurchase program will be subject to market conditions and other factors and does not obligate us to repurchase any dollar amount or number of shares of our common stock and the repurchase program may be extended, modified, suspended or discontinued at any time.
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Subsequent to fiscal year end, in March 2024, our Board of Directors increased the repurchase program mentioned above and authorized an additional $3.0 billion to that repurchase program.
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From August 2010 when our Board of Directors initially authorized a stock repurchase program through February 3, 2024, a total of 312.9 million shares have been repurchased under the Company’s stock repurchase program for a total $4.5 billion in cash and $299.5 million remains available for future stock repurchases.
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Subsequent to fiscal year end, with the additional authorized $3.0 billion to the repurchase program, $3.3 billion remains available for future stock repurchases as of March 6, 2024.

Item 7. Management's Discussion & Analysis

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

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Biggest changeInterest Income Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Interest income $ 5.3 $ 0.8 562.5 % % of net revenue 0.1 % — % Interest income increased by $4.5 million in fiscal 2023 compared to fiscal 2022 due to higher interest rates on our invested cash and higher cash balance. 49 Interest Expense Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Interest expense $ (170.6) $ (139.3) 22.5 % % of net revenue (2.9) % (3.1) % Interest expense increased by $31.3 million in fiscal 2023 compared to fiscal 2022.
Biggest changeInterest Income Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentages) Interest income $ 8.8 $ 5.3 66.0 % % of net revenue 0.2 % 0.1 % Interest income increased by $3.5 million in fiscal 2024 compared to fiscal 2023 due to higher interest rates on our invested cash.
Conversely, we may have insufficient inventory, or be unable to obtain the supplies or contract manufacturing capacity to meet that demand, which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships.” Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet demand which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships.” Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Evaluating the need for a valuation allowance for deferred tax assets requires judgment and analysis of all the positive and negative evidence available, including recent earnings history and cumulative losses in recent years, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies to determine whether all or some portion of the deferred tax assets will not be realized.
Evaluating the need for a valuation allowance for deferred tax assets requires judgment and analysis of all available positive and negative evidence, including recent earnings history and cumulative losses in recent years, reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies to determine whether all or some portion of the deferred tax assets will not be realized.
Our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards, and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property.
Our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses, the tax laws and regulations in various jurisdictions, the availability of tax incentives, tax credits and loss carryforwards, and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property.
If we assess qualitative factors and conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we determine not to use qualitative assessment, then a quantitative impairment test is performed.
If we assess qualitative factors and conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we determine not to use the qualitative assessment, then a quantitative impairment test is performed.
We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. See “Note 13 – Income Taxes” in the Notes to the Consolidated Financial Statements for further information.
We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. See “Note 13 – Income Taxes” in the Notes to Consolidated Financial Statements for further information.
The increase in accounts receivable was primarily due to increase sales, as well as changes to the timing of shipments due to evolving supply chain dynamics. We increased inventory in order to better support unfulfilled backlog, new product ramps and the impact from inventory correction late in the year.
The increase in accounts receivable was primarily due to increase in sales, as well as changes to the timing of shipments due to evolving supply chain dynamics. We increased inventory in order to better support unfulfilled backlog, new product ramps and the impact from inventory correction late in the year.
We believe we have adequately provided for in our financial statements additional taxes that we estimate to be required as a result of such examinations. While we believe that we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than our accrued position.
We believe we have adequately provided for in our financial statements additional taxes that we estimate to be required to be paid as a result of such examinations. While we believe that we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than our accrued position.
When testing goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value or we may determine to proceed directly to the quantitative impairment test.
When testing goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or we may determine to proceed directly to the quantitative impairment test.
Recent Accounting Pronouncements Please see “Note 2 – Significant Accounting Policies - Recent Accounting Pronouncements” in our Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K. Related Party Transactions None.
Recent Accounting Pronouncements Please see “Note 2 – Significant Accounting Policies - Recent Accounting Pronouncements” in our Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K. Related Party Transactions None.
We believe that our existing cash, cash equivalents, together with cash generated from operations, and funds from our 2020 Revolving Credit Facility will be sufficient to cover our working capital needs, capital expenditures, investment requirements, any declared dividends, repurchases of our common stock and commitments (including those discussed in “Note 6 – Commitments and Contingencies” in the Notes to the Consolidated Financial Statements) for at least the next twelve months.
We believe that our existing cash, cash equivalents, together with cash generated from operations, and funds from our 2023 Revolving Credit Facility will be sufficient to cover our working capital needs, capital expenditures, investment requirements, any declared dividends, repurchases of our common stock and commitments (including those discussed in “Note 6 – Commitments and Contingencies” in the Notes to Consolidated Financial Statements) for at least the next twelve months.
If the sum of the expected future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.
Cash Flows from Financing Activities Net cash used in financing activities of $662.9 million in fiscal 2023 was primarily attributable to $265.6 million repayment of debt principal, $227.6 million for withholding tax paid on behalf of employees for net share settlement, $204.4 million payment for our quarterly dividends, $142.5 million payments for technology license obligations and $115.0 million repurchases of common stock.
Net cash used in financing activities of $662.9 million in fiscal 2023 was primarily attributable to $265.6 million repayment of debt principal, $227.6 million for withholding tax paid on behalf of employees for net share settlement, $204.4 million payment for our quarterly dividends, $142.5 million payments for technology license obligations, and $115.0 million repurchases of common stock.
The income tax expense for fiscal 2023 is also impacted by a substantial portion of the Company’s earnings, or in some cases, losses being taxed or benefited at rates lower than the U.S. statutory rate, stock compensation tax benefits, and disallowed deductions related to non-deductible compensation.
The income tax expense for fiscal 2023 is also impacted by a substantial portion of our earnings, or in some cases, losses being taxed or benefited at rates lower than the U.S. statutory rate, stock compensation tax benefits, and disallowed deductions related to non-deductible compensation.
For further information on our significant accounting policies, see “Note 2 – Significant Accounting Policies” in the Notes to Consolidated Financial Statements. 43 Revenue Recognition. We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
For further information on our significant accounting policies, see “Note 2 – Significant Accounting Policies” in the Notes to Consolidated Financial Statements. 47 Revenue Recognition. We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
Actual variable consideration could differ from these estimates. A portion of our net revenue is derived from sales through third-party logistics providers who maintain warehouses in close proximity to our customer’s facilities. Revenue from sales through these third-party logistics providers is not recognized until the product is pulled from stock by the customer.
Actual variable consideration could differ from these estimates. A portion of our net revenue is derived from sales through third-party logistics providers who maintain warehouses in close proximity to our customers’ facilities. Revenue from sales through these third-party logistics providers is not recognized until the product is pulled from stock by the customer.
To the extent that our existing cash and cash equivalents together with cash generated by operations, and funds available under our 2020 Revolving Credit Facility are insufficient to fund our future activities, we may need to raise additional funds through public or private debt or equity financing.
To the extent that our existing cash and cash equivalents, together with cash generated by operations, and funds available under our 2023 Revolving Credit Facility are insufficient to fund our future activities, we may need to raise additional funds through public or private debt or equity financing.
Cash Flows from Investing Activities Net cash used in investing activities of $328.4 million in fiscal 2023 was primarily driven by the purchases of property and equipment of $206.2 million, net cash consideration for business acquisitions of $112.3 million , and purchases of technology licenses of $11.1 million.
Net cash used in investing activities of $328.4 million in fiscal 2023 was primarily driven by the purchases of property and equipment of $206.2 million, net cash consideration for business acquisitions of $112.3 million , and purchases of technology licenses of $11.1 million.
Changes in recognition or measurement with respect to our uncertain tax positions are reflected in the period in which a change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. The calculation of our tax liabilities involves the inherent uncertainty associated with complex tax laws.
Changes in judgment regarding the recognition or measurement of uncertain tax positions are reflected in the period in which the change occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. The calculation of our tax liabilities involves the inherent uncertainty associated with complex tax laws.
This process involves estimating our actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. 44 We recognize income taxes using an asset and liability approach.
This process involves estimating our actual tax expense together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. 48 We recognize income taxes using an asset and liability approach.
We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. As of the last day of the fourth quarter of fiscal 2023, we performed our annual impairment assessment for testing goodwill. A step one assessment was performed. Based on our assessment, we determined there was no goodwill impairment. Business Combinations.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. As of the last day of the fourth quarter of fiscal 2024, we performed our annual impairment assessment for testing goodwill. A quantitative assessment was performed. Based on our assessment, we determined there was no goodwill impairment. Business Combinations.
We review goodwill for impairment annually on the last business day of our fiscal fourth quarter, and more frequently, if an event occurs or circumstances change that indicate the fair value of the reporting unit may be below its carrying amount.
Goodwill is measured and tested for impairment annually on the last business day of our fiscal fourth quarter, and more frequently, if an event occurs or circumstances change that indicate the fair value of the reporting unit may be below its carrying amount.
Any unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitation. The material jurisdictions in which we are subject to potential examination by tax authorities throughout the world include China, India, Israel, Singapore, Germany, and the United States.
Unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitations. The material jurisdictions in which we may be subject to examination by tax authorities throughout the world include China, India, Israel, Singapore, Germany, and the United States.
Legal Settlement Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Legal settlement $ 100.0 $ — * % of net revenue 1.7 % — % *Not meaningful We recorded a charge of $100.0 million in fiscal year 2023 related to the settlement of a contractual dispute.
Legal Settlement Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentages) Legal settlement $ — $ 100.0 * % of net revenue — % 1.7 % *Not meaningful We recorded a charge of $100.0 million in fiscal 2023 related to the settlement of a contractual dispute.
It is also possible that significant negative evidence may become available that causes us to conclude that a valuation allowance is needed on certain of our deferred tax assets, which would adversely affect our income tax provision in the period of such change in judgment.
It is also possible that significant negative evidence may become available that causes us to conclude that a valuation allowance is needed on certain of our deferred tax assets, which would adversely affect our income tax provision in the period of such change in judgment. Additionally, please see the information in “Item 1A.
Accordingly, every fifth or sixth fiscal year will have a 53-week period. The additional week in a 53-week year is added to the fourth quarter, making such quarter consist of 14 weeks. Fiscal 2023, fiscal 2022 and fiscal 2021 each had a 52-week period. 42 Capital Return Program.
Accordingly, every fifth or sixth fiscal year will have a 53-week period. The additional week in a 53-week year is added to the fourth quarter, making such quarter consist of 14 weeks. Fiscal 2024 had a 53-week period. Fiscal 2023 and fiscal 2022 each had a 52-week period.
Sales shipped to customers with operations in Asia represented approximately 75% of our net revenue in fiscal 2023, 78% of our net revenue in fiscal 2022 and 80% of our net revenue in fiscal 2021.
Sales shipped to customers with operations in Asia represented approximately 70% of our net revenue in fiscal 2024, 75% of our net revenue in fiscal 2023 and 78% of our net revenue in fiscal 2022.
Actual results could differ from these estimates, and such differences could affect the results of operations reported in future periods. In the macroeconomic environment affected by COVID-19, our estimates could require increased judgment and carry a higher degree of variability and volatility.
Actual results could differ from these estimates, and such differences could affect the results of operations reported in future periods. In the current macroeconomic environment, these estimates could require increased judgment and carry a higher degree of variability and volatility.
Additionally, please see the information in “Item 1A: Risk Factors” under the caption “ Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results .” Our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 includes a discussion and analysis of our financial condition and results of operations for the year ended January 30, 2021 and year-to-year comparisons between the fiscal years ended January 29, 2022 and January 30, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 50 Liquidity and Capital Resources Our principal source of liquidity as of January 28, 2023 consisted of approximately $911.0 million of cash and cash equivalents, of which approximately $642.0 million was held by subsidiaries outside of the United States.
Risk Factors” under the caption “ Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results .” Our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 includes a discussion and analysis of our financial condition and results of operations for the year ended January 29, 2022 and year-to-year comparisons between the fiscal years ended January 28, 2023 and January 29, 2022 in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Liquidity and Capital Resources Our principal source of liquidity as of February 3, 2024 consisted of approximately $950.8 million of cash and cash equivalents, of which approximately $744.1 million was held by subsidiaries outside of the United States.
Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. 46 Results of Operations Years Ended January 28, 2023 and January 29, 2022 The following table sets forth information derived from our consolidated statements of operations expressed as a percentage of net revenue: Year Ended January 28, 2023 January 29, 2022 Net revenue 100.0 % 100.0 % Cost of goods sold 49.5 53.7 Gross profit 50.5 46.3 Operating expenses: Research and development 30.1 31.9 Selling, general and administrative 14.3 21.4 Legal settlement 1.7 — Restructuring related charges 0.4 0.7 Total operating expenses 46.5 54.0 Operating income (loss) 4.0 (7.7) Interest income 0.1 — Interest expense (2.9) (3.1) Other income, net 0.2 — Income (loss) before income taxes 1.4 (10.8) Provision (benefit) for income taxes 4.2 (1.4) Net loss (2.8) % (9.4) % Net Revenue Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentage) Net revenue $ 5,919.6 $ 4,462.4 32.7 % Our net revenue for fiscal 2023 increased by $1.5 billion compared to net revenue for fiscal 2022.
Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. 50 Results of Operations Years Ended February 3, 2024 and January 28, 2023 The following table sets forth information derived from our consolidated statements of operations expressed as a percentage of net revenue: Year Ended February 3, 2024 January 28, 2023 Net revenue 100.0 % 100.0 % Cost of goods sold 58.4 49.5 Gross profit 41.6 50.5 Operating expenses: Research and development 34.4 30.1 Selling, general and administrative 15.1 14.3 Legal settlement — 1.7 Restructuring related charges 2.4 0.4 Total operating expenses 51.9 46.5 Operating income (loss) (10.3) 4.0 Interest income 0.2 0.1 Interest expense (3.8) (2.9) Other income, net 0.2 0.2 Income (loss) before income taxes (13.7) 1.4 Provision for income taxes 3.2 4.2 Net loss (16.9) % (2.8) % Net Revenue Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentage) Net revenue $ 5,507.7 $ 5,919.6 (7.0) % Our net revenue for fiscal 2024 decreased by $411.9 million compared to net revenue for fiscal 2023.
Circumstances which could trigger a review include, but are not limited to the following: • significant decreases in the market price of the asset; • significant adverse changes in the business climate or legal factors; • accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; • current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and 45 • current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
Circumstances which could trigger a review include, but are not limited to the following: • significant decreases in the market price of the asset; • significant adverse changes in the business climate or legal factors; • accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; • current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and • current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. 49 Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets and intangible assets may not be recoverable, we estimate the future cash flows, undiscounted and without interest charges, expected to be generated by the asset from its use or eventual disposition.
As of January 28, 2023, we had $735.0 million borrowings outstanding under the 2024 Term Loan and $787.5 million borrowings outstanding under the 2026 Term Loan. In December 2020, we also executed a debt agreement to obtain a $750.0 million revolving credit facility (the “2020 Revolving Credit Facility”).
As of February 3, 2024, we had $700.0 million borrowings outstanding under the 2026 Term Loan. In December 2020, we also executed a debt agreement to obtain a $750.0 million revolving credit facility.
Research and Development Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Research and development $ 1,784.3 $ 1,424.2 25.3 % % of net revenue 30.1 % 31.9 % Research and development expense increased by $360.1 million in fiscal 2023 compared to fiscal 2022.
Research and Development Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentages) Research and development $ 1,896.2 $ 1,784.3 6.3 % % of net revenue 34.4 % 30.1 % Research and development expense increased by $111.9 million in fiscal 2024 compared to fiscal 2023.
Provision (Benefit) for Income Taxes Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentage) Provision (benefit) for income taxes $ 248.6 $ (62.5) (497.8) % The income tax expense for fiscal 2023 differs from the U.S. federal statutory rate of 21% primarily due to the remeasurement of Singapore deferred taxes upon extension of the Company’s tax incentive in Singapore, tax benefits attributable to reduction in tax reserves as a result of settled income tax audits in combination with the lapsing of statute of limitations, offset by foreign income inclusions in the U.S., and a tax expense related to the recapture of Israel corporate income taxes.
The income tax expense for fiscal 2023 differed from the U.S. federal statutory rate of 21% primarily due to the remeasurement of Singapore deferred taxes upon extension of our tax incentive in Singapore, tax benefits attributable to reduction in tax reserves as a result of settled income tax audits in combination with the lapsing of statute of limitations, offset by foreign income inclusions in the U.S., and a tax expense related to the recapture of Israel corporate income taxes.
As a multinational corporation, we conduct our business in many countries and are subject to taxation in many jurisdictions. The taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions.
The taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions.
On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, income taxes, goodwill and other intangible assets, and business combinations.
On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, provisions for sales returns and allowances, inventory excess and obsolescence, goodwill and other intangible assets, business combinations, restructuring, income taxes, litigation, and other contingencies.
As of January 28, 2023, a total of 310.4 million shares have been repurchased since inception of our current and previous stock repurchase programs for an aggregate total of $4.4 billion in cash. We returned $319.4 million to stockholders in fiscal 2023 through $115.0 million in repurchases of shares of common stock and $204.4 million in cash dividends.
As of February 3, 2024, a total of 312.9 million shares have been repurchased since inception of our current and previous stock repurchase programs for an aggregate total of $4.5 billion in cash. We returned $356.8 million to stockholders in fiscal 2024 through $150.0 million in repurchases of shares of common stock and $206.8 million in cash dividends.
See also Part I, Item IA, “Risk Factors,” including, but not limited to, the risk detailed under the caption “ Adverse changes in the political and economic policies of the U.S. government in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business. ” Our fiscal year is the 52- or 53-week period ending on the Saturday closest to January 31.
See also Part I, Item IA, “Risk Factors,” including, but not limited to, the risk detailed under the caption “ Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business. ” Restructuring .
The increase in accrued employee compensation was due to increases in our bonus accrual and in employee contributions to the employee stock purchase plan, net of payments. Net cash provided by operating activities was $819.3 million for fiscal 2022.
The increase in accrued employee compensation was due to increases in our bonus accrual and in employee contributions to the employee stock purchase plan, net of payments.
Other Income, net Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Other income, net $ 12.4 $ 2.7 359.3% % of net revenue 0.2 % — % Other income, net increased by $9.7 million in fiscal 2023 compared to fiscal 2022.
Other Income, net Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentages) Other income, net $ 11.9 $ 12.4 (4.0)% % of net revenue 0.2 % 0.2 % Other income, net was relatively flat in fiscal 2024 compared to fiscal 2023.
Stock-Based Compensation Expense Year Ended January 28, 2023 January 29, 2022 (in millions) Cost of goods sold $ 43.3 $ 31.1 Research and development 372.4 273.2 Selling, general and administrative 136.7 173.2 Total stock-based compensation $ 552.4 $ 477.5 48 Stock-based compensation expense increased by $74.9 million in fiscal 2023 compared to fiscal 2022.
Stock-Based Compensation Expense Year Ended February 3, 2024 January 28, 2023 (in millions) Cost of goods sold $ 49.1 $ 43.3 Research and development 411.1 372.4 Selling, general and administrative 149.6 136.7 Total stock-based compensation $ 609.8 $ 552.4 Stock-based compensation expense increased by $57.4 million in fiscal 2024 compared to fiscal 2023.
The notes are registered under the Securities Act. For a description of our contractual obligations including debt, leases, and purchase commitments, see “Note 4 – Debt,” “Note 5 – Leases,” and “Note 6 – Commitments and Contingencies” in the Notes to the Consolidated Financial Statements.
For a description of our contractual obligations including debt, leases, and purchase commitments, see “Note 4 – Debt,” “Note 5 – Leases,” and “Note 6 – Commitments and Contingencies” in the Notes to Consolidated Financial Statements. In addition, see “Note 13 – Income Taxes” regarding tax related contingencies and uncertain tax positions in the Notes to Consolidated Financial Statements.
Cash and Short-Term Investments. Our cash and cash equivalents were $911.0 million at January 28, 2023, which were $297.5 million higher than our balance at our fiscal year ended January 29, 2022 of $613.5 million . Sales and Customer Composition.
Cash and Short-Term Investments. Our cash and cash equivalents were $950.8 million at February 3, 2024, which were $39.8 million higher than our balance at January 28, 2023 of $911.0 million. Sales and Customer Composition.
We regularly monitor the creditworthiness of our customers and distributors and believe these distributors’ sales to diverse end customers and geographies further serve to mitigate our exposure to credit risk. Most of our sales are made to customers with operations located outside of the United States, primarily in Asia, and majority of our products are manufactured outside the United States.
We regularly monitor the creditworthiness of our customers and distributors and believe these distributors’ sales to diverse end customers and geographies further serve to mitigate our exposure to credit risk.
Our dividend payments and repurchases of common stock may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase stock at all or in any particular amounts. 51 Cash Flows from Operating Activities Net cash provided by operating activities was $1.3 billion for fiscal 2023 compared to net cash provided by operating activities of $819.3 million for fiscal 2022.
Our dividend payments and repurchases of common stock may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase stock at all or in any particular amounts.
Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years, and as a result, in jurisdictions with cumulative losses, we have provided for a full valuation allowance on deferred tax assets.
Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years. Using available evidence and judgment, we establish a valuation allowance for deferred tax assets, when it is determined that it is more likely than not that they will not be realized.
We had a net loss of $421.0 million adjusted for the following non-cash items: amortization of acquired intangible assets of $979.4 million, stock-based compensation expense of $460.7 million, depreciation and amortization of $265.9 million, amortization of inventory fair value adjustment associated with Inphi and Innovium acquisitions of $194.3 million, deferred income tax benefit of $93.9 million, amortization of deferred debt issuance costs and debt discounts of $21.6 million, restructuring related impairment charges of $6.2 million and $69.0 million net loss from other non-cash items.
We had a net loss of $933.4 million adjusted for the following non-cash items: amortization of acquired intangible assets of $1.1 billion, stock-based compensation expense of $609.8 million, depreciation and amortization of $299.8 million, deferred income tax expense of $150.8 million, restructuring related impairment charges of $32.9 million, amortization of deferred debt issuance costs and debt discounts of $10.7 million, and $44.2 million net loss from other non-cash items.
During our fiscal year ended January 28, 2023, we repurchased 2.3 million shares of our common stock for $115.0 million, including 0.9 million shares of our common stock repurchased for $50.0 million pursuant to a 10b5-1 trading plan during the second quarter of fiscal 2023.
During the year ended February 3, 2024, we repurchased 2.5 million shares of our common stock for $150.0 million, including 0.8 million shares of our common stock repurchased for $50.0 million pursuant to a 10b5-1 trading plan. As of February 3, 2024, $299.5 million remained available for future stock repurchases.
We value our inventory at the lower of cost or net realizable value, cost being determined under the first-in, first-out method.
From time to time, we become aware of specific warranty situations, and we record specific accruals to cover these exposures. Inventories. We value our inventory at the lower of cost or net realizable value, cost being determined under the first-in, first-out method.
Selling, General and Administrative Year Ended January 28, 2023 January 29, 2022 % Change in 2023 (in millions, except percentages) Selling, general and administrative $ 843.6 $ 955.3 (11.7) % % of net revenue 14.3 % 21.4 % Selling, general and administrative expense decreased by $111.7 million in fiscal 2023 compared to fiscal 2022.
Selling, General and Administrative Year Ended February 3, 2024 January 28, 2023 % Change in 2024 (in millions, except percentages) Selling, general and administrative $ 834.0 $ 843.6 (1.1) % % of net revenue 15.1 % 14.3 % Selling, general and administrative expense was relatively flat in fiscal 2024 compared to fiscal 2023.
Cash outflow from working capital of $662.9 million was primarily driven by an increase in accounts receivable, an increase in inventories and an increase in prepaid expenses and other assets.
Cash inflow from working capital of $57.8 million for fiscal 2024 was primarily driven by a decrease in accounts receivable, and a decrease in inventories, partially offset by cash outflows due to an increase in prepaid expenses and other assets, and a decrease in accounts payable.
Leveraging leading intellectual property and deep system-level expertise, as well as highly innovative security firmware, our solutions are empowering the data economy and enabling the data center, enterprise networking, carrier infrastructure, consumer, and automotive/industrial end markets. Net revenue in fiscal 2023 was $5.9 billion and was 33% higher than net revenue of $4.5 billion in fiscal 2022.
Leveraging leading intellectual property and deep system-level expertise, as well as highly innovative security firmware, our solutions are empowering the data economy and enabling the data center, enterprise networking, carrier infrastructure, consumer, and automotive/industrial end markets. Our fiscal year is the 52- or 53-week period ending on the Saturday closest to January 31.
This was due to an increase in sales from a majority of our end markets. Sales increased from the data center end market by 35%, from the enterprise networking end market by 51%, from the carrier infrastructure end market by 32%, and from the automotive/industrial end market by 43% compared to fiscal 2022.
This was due to a decrease in sales from a majority of our end markets. Sales decreased from the data center end market by 8%, from the enterprise networking end market by 10%, from the consumer end market by 11%, and from the carrier infrastructure end market by 3%.
However, with the start of a broad inventory correction in the semiconductor industry, supply constraints have now mostly resolved. During the second half of fiscal 2023, in response to a softening demand environment, customers started requesting to push out shipments and reschedule orders to manage their inventory. In the fourth quarter, we saw the largest impact from our storage customers.
During the second half of fiscal 2023, in response to a softening demand environment, customers started requesting to push out shipments and reschedule orders to manage their inventory. We have seen these inventory corrections continue to impact our storage customers, as well as enterprise networking and our wired carrier customers.
In December 2020, to fund the Inphi acquisition, we executed the 2024 and 2026 Term Loan Agreement to obtain the 2024 and 2026 Term Loans. For the year ended January 28, 2023, we repaid $65.6 million of the principal outstanding on the 2026 Term Loan.
In December 2020, to fund the Inphi acquisition, we executed the 2024 and 2026 Term Loan Agreement to obtain the 2024 and 2026 Term Loans. On April 14, 2023, we entered into an amendment to the 2024 and 2026 Term Loan Agreement.
Net cash used in investing activities of $3.7 billion in fiscal 2022 was primarily driven by the net cash consideration for business acquisitions of $3.6 billion, purchases of property and equipment of $169.2 million and purchases of technology licenses of $17.7 million.
Cash Flows from Investing Activities Net cash used in investing activities of $350.5 million in fiscal 2024 was primarily driven by the purchases of property and equipment of $336.3 million, and purchases of technology licenses of $13.9 million.
These outflows were partially offset by proceeds from issuance of debt of $200.0 million, and $91.3 million proceeds from the issuance of our common stock under our equity inventive plans. 52 Net cash provided by financing activities of $2.8 billion in fiscal year 2022 was primarily attributable to proceeds from issuance of debt of $3.9 billion, $160.3 million proceeds from capped calls and $84.5 million proceeds from the issuance of our common stock under our equity inventive plans.
These outflows were partially offset by proceeds from issuance of debt of $200.0 million, and $91.3 million proceeds from the issuance of our common stock under our equity incentive plans.
In addition, demand for our products has come down significantly from our OEM customers in China, as they deal with a changing macroeconomic situation. To secure capacity over the long term, we have entered into and expect to continue to enter into capacity reservation arrangements with certain foundries and partners for substrates.
To secure capacity over the long term, we have entered into and expect to continue to enter into capacity reservation arrangements with certain foundries and partners for substrates. See “Note 6 – Commitments and Contingencies” in the Notes to Consolidated Financial Statements for additional information.
Using available evidence and judgment, we establish a valuation allowance for deferred tax assets, when it is determined that it is more likely than not that they will not be realized. Valuation allowances have been provided primarily against the U.S. and state research and development credits and certain acquired net operating losses and deferred tax assets of foreign subsidiaries.
Valuation allowances have been provided primarily against U.S. federal and state research and development credits and certain acquired net operating losses and deferred tax assets of foreign subsidiaries. A change in the assessment of the realizability of deferred tax assets may materially impact our tax provision in the period in which a change of assessment occurs.
The warranty accrual is estimated primarily based on historical claims compared to historical revenues and assumes that we will have to replace products subject to a claim. From time to time, we become aware of specific warranty situations, and we record specific accruals to cover these exposures. Warranty expenses were not material for the periods presented. Inventories .
We may offer a longer warranty period in limited situations based on product type and negotiated warranty terms with certain customers. The warranty accrual is estimated primarily based on historical claims compared to historical revenues and assumes that we will have to replace products subject to a claim.
Refer to “Note 6 – Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for a discussion of this settlement.
Refer to “Note 10 – Restructuring” in the Notes to Consolidated Financial Statements for further information.
During the year ended January 28, 2023 we drew down $200.0 million on the 2020 Revolving Credit Facility which has been fully repaid at January 28, 2023. As of January 28, 2023, we had $2.0 billion aggregate principal amount of Senior Notes outstanding and $1.0 billion in aggregate principal amount of the MTG/MTI Senior Notes outstanding.
During the quarter ended October 28, 2023, we repaid the outstanding 2023 Revolving Credit Facility of $200.0 million. Further, we drew down an additional $50.0 million on the 2023 Revolving Credit Facility and repaid $50.0 million in the same quarter.
The increase in inventories is due to strong organic revenue growth and business acquisitions during the year as well as higher materials and manufacturing prices. The increase in prepaid expenses and other assets was due to payments for capacity reservation agreements and an increase in ship and debit reserve.
The increase in prepaid expenses and other assets was primarily due to prepayments on supply capacity reservation agreements net of refunds, and an increase in ship and debit reserve.
A change in the assessment of the realizability of deferred tax assets may materially impact our tax provision in the period in which a change of assessment occurs. Taxes due on Global Intangible Low-Taxed Income (GILTI) exclusions in U.S. are recognized as a current period expense when incurred.
Taxes due on Global Intangible Low-Taxed Income (“GILTI”) inclusions in U.S. are recognized as a current period expense when incurred. As a multinational corporation, we conduct our business in many countries and are subject to taxation in many jurisdictions.
This was due to an increase in sales from a majority of our end markets. Sales increased from the data center end market by 35%, from the enterprise networking end market by 51%, from the carrier infrastructure end market by 32%, and from the automotive/industrial end market by 43% co mpared to fiscal 2022.
Sales decreased from the data center end market by 8%, from the enterprise networking end market by 10%, from the consumer end market by 11%, and from the carrier infrastructure end market by 3%. The decreases were partially offset by an increase in sales from the automotive/industrial end market by 9% compared to fiscal 2023.
These inflows were partially offset by $526.8 million repayment of debt principal, $305.8 million for withholding tax paid on behalf of employees for net share settlement, $191.0 million payment for our quarterly dividends, $181.2 million payment for repurchases and settlement of convertible notes, $134.5 million payments for technology license obligations and $11.8 million payments for debt financing and equity issuance costs associated with the Inphi acquisition.
Cash Flows from Financing Activities Net cash used in financing activities of $980.2 million in fiscal 2024 was primarily attributable to $1.6 billion repayment of debt principal, $223.7 million for withholding tax paid on behalf of employees for net share settlement, $206.8 million payment for our quarterly dividends, $150.3 million payments for technology license obligations, and $150.0 million repurchases of common stock.
Our products are generally subject to warranty, which provides for the estimated future costs of replacement upon shipment of the product. Our products carry a standard one-year warranty, with certain exceptions in which the warranty period can extend to more than one year based on contractual agreements.
Our products are generally subject to warranty, which provides for the estimated future costs of replacement upon shipment of the product. We generally warrant that our products sold to our customers will conform to our approved specifications and be free from defects in material and workmanship under normal use and conditions for one year.
The sales from our consumer end market were relatively flat for fiscal 2023 compared to fiscal 2022.
The decreases were partially offset by an increase in sales from the automotive/industrial end market by 9% compared to fiscal 2023.
Stock-based compensation under research and development and cost of goods sold increased by $99.2 million and $12.2 million, respectively, partially offset by decrease under selling, general and administrative expense by $36.5 million.
Stock-based compensation under research and development, selling, general and administrative, and cost of goods sold increased by $38.7 million, $12.9 million, and $5.8 million, respectively. The increase was primarily due to an increase in equity awards granted in fiscal 2024 as compared to prior years, as well as an increase in expense associated with our employee stock purchase plan.
As of January 28, 2023, $449.5 million remained available under our stock repurchase program for future stock repurchases. See “Note 11 – Stockholders’ Equity” in the Notes to the Consolidated Financial Statements for further information.
Subsequent to fiscal year end, in March 2024, our Board of Directors increased the repurchase program mentioned above and authorized an additional $3.0 billion to that repurchase program. See “Note 11 – Stockholders’ Equity” in the Notes to Consolidated Financial Statements for further information.
The increase was primarily due to higher interest expense and amortization of debt issuance costs associated with the 2024 and 2026 Term Loans and the Senior Notes, partially offset by prior period costs associated with the bridge loan termination.
The increase was primarily due to higher interest expense associated with the 2024 and 2026 Term Loans, as well as interest expense associated with the 2029 and 2033 Senior Notes issued during the third quarter of fiscal 2024. Refer to “Note 4 – Debt” in the Notes to Consolidated Financial Statements for further information.
Removed
Starting in fiscal 2022 and through the first half of fiscal 2023, in response to a large increase in demand from our customers for our products in a majority of our end markets as they continued to invest in data infrastructure, our operations team continued to increase production with our global supply chain partners to alleviate supply constraints.
Added
Net revenue in fiscal 2024 was $5.5 billion and was 7.0% lower than net revenue of $5.9 billion in fiscal 2023. This was due to a decrease in sales from a majority of our end markets.
Removed
See “Note 6 – Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for additional information. We continue to monitor the impact of COVID-19 on our business.
Added
In addition, we have continued to see low demand from our OEM customers in China. Starting in the first quarter of fiscal 2024, we have seen a strong increase in demand for our optical products, driven by AI applications.
Removed
As part of our response to the effects of COVID-19, we adopted a hybrid work policy where most of our employees have the option to split their time between working from home and the office.
Added
We expect that the U.S. government’s export restrictions on certain Chinese customers to continue to impact our revenue.
Removed
We continue to expect lingering impacts with respect to COVID-19 on our business, for a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, see Part I, Item 1A, “Risk Factors,” including but not limited to the risk detailed under the caption “ We face risks related to the COVID-19 pandemic which currently has, and may continue in the future to, significantly disrupt and adversely impact our manufacturing, research and development, operations, sales and financial results. ” We expect that the U.S. government’s export restrictions on certain Chinese customers to continue to impact our revenue.
Added
In the first quarter of fiscal 2024, we initiated a restructuring plan to streamline our organization and optimize resources. The restructuring and other related charges recorded were $131.1 million for the year ended February 3, 2024. See “Note 10 - Restructuring” in the Notes to Consolidated Financial Statements for further information. 46 Capital Return Program.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−3 removed6 unchanged
Biggest changeWe maintain an investment policy that requires minimum credit ratings, diversification of credit risk and limits the long-term interest rate risk by requiring effective maturities of generally less than five years.
Biggest changeA hypothetical increase or decrease in the interest rate by 1 percentage point may result in an increase or decrease in annual interest expense by approximately $6.4 million. 56 We maintain an investment policy that requires minimum credit ratings, diversification of credit risk and limits the long-term interest rate risk by requiring effective maturities of generally less than five years.
To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within operating expense, we performed a sensitivity analysis to determine the impact that an adverse change in exchange rates would have on our financial statements. If the U.S. dollar weakened by 10%, our operating expense could increase by approximately 2%. 53
To provide an assessment of the foreign currency exchange risk associated with our foreign currency exposures within operating expense, we performed a sensitivity analysis to determine the impact that an adverse change in exchange rates would have on our financial statements. If the U.S. dollar weakened by 10%, our operating expense could increase by approximately 2%. 57
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. There were no such investments on hand at January 28, 2023, aside from cash and cash equivalents. Foreign Currency Exchange Risk .
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. There were no such investments on hand at February 3, 2024, aside from cash and cash equivalents. Foreign Currency Exchange Risk .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk . With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding 2024 and 2026 Term Loans.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk . With our outstanding debt, we are exposed to various forms of market risk, including the potential losses arising from adverse changes in interest rates on our outstanding 2026 Term Loan. See “Note 4 – Debt” in our Notes to Consolidated Financial Statements for further information.
We typically invest our excess cash primarily in highly liquid debt instruments of the U.S. government and its agencies, money market mutual funds, corporate debt securities and municipal debt securities that are classified as available-for-sale and time deposits.
We typically invest our excess cash primarily in highly liquid debt instruments including money market funds and time deposits. Investments in both fixed rate and floating rate interest earning securities carry a degree of interest rate risk.
Removed
See “Note 4 – Debt” in our Notes to the Consolidated Financial Statements for further information. A hypothetical increase or decrease in the interest rate by 1 percentage point may result in an increase or decrease in annual interest expense by approximately $15.1 million. We currently carry debt that relies on one-month LIBOR as the benchmark rate.
Removed
The one-month LIBOR is expected to cease publication after June 30, 2023. To the extent the one-month LIBOR ceases to exist, the 2024 and 2026 Term Loans and 2020 Revolving Credit Facility contemplate an alternative benchmark rate without the need for any amendment thereto.
Removed
These investments are recorded on our consolidated balance sheets at fair market value with their related unrealized gain or loss reflected as a component of accumulated other comprehensive income (loss) in the consolidated statement of stockholders’ equity. Investments in both fixed rate and floating rate interest earning securities carry a degree of interest rate risk.

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