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What changed in Skyworks Solutions's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Skyworks Solutions's 2022 and 2023 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 2023 report.

+180 added−191 removedSource: 10-K (2023-11-17) vs 10-K (2022-11-23)

Top changes in Skyworks Solutions's 2023 10-K

180 paragraphs added · 191 removed · 161 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

34 edited+8 added−4 removed32 unchanged
Biggest changeOur Product Portfolio Our extensive product portfolio includes: • Amplifiers: the modules that strengthen the signal so that it has sufficient energy to reach a base station • Antenna Tuners: aperture and impedance tuning products that improve antenna performance across frequencies • Attenuators: circuits that allow a known source of power to be reduced by a predetermined factor (usually expressed as decibels) • Automotive Tuners and Digital Radios: tuners, data receivers, and digital radio coprocessors used in automotive infotainment systems • Circulators/Isolators: ferrite-based components commonly found on the output of high-power amplifiers used to protect receivers in wireless transmission systems • Wireless ASoC: an intelligent 2.4 GHz and 5GHz wireless radio integrated circuit that includes all the analog and digital functions optimized for building cognitive wireless audio headsets, headphones, and wireless speaker systems • DC/DC Converters: an electronic circuit which converts a source of direct current from one voltage level to another • Demodulators: a device or an RF block used in receivers to extract the information that has been modulated onto a carrier or from the carrier itself • Detectors: devices used to measure and control RF power in wireless systems • Digital Power Isolators: energy efficient solutions used in industrial control, solar inverters and hybrid/electric automotive drive trains • Diodes: semiconductor devices that pass current in one direction only • Directional Couplers: transmission coupling devices for separately sampling the forward or backward wave in a transmission line • Diversity Receive Modules: devices used to improve receiver sensitivity in high data rate applications • Filters: devices for recovering and separating mixed and modulated data in RF stages, including SAW, TC-SAW, and BAW filters • Front-end Modules: two or more functions co-packaged to optimize the performance, cost, and application suitability in products, including intermediate or radio frequency signal paths • Hybrid: a type of directional coupler used in radio and telecommunications • LED Drivers: devices which regulate the current through a light-emitting diode or string of diodes for the purpose of creating light • Low-Noise Amplifiers: devices used to reduce system noise figure in the receive chain • Mixers: devices that enable signals to be converted to a higher or lower frequency signal and thereby allowing the signals to be processed more effectively • Modulators: devices that take a baseband input signal and output a radio frequency modulated signal • Optocouplers/Optoisolators: semiconductor devices that allow signals to be transferred between circuits or systems while ensuring that the circuits or systems are electrically isolated from each other • Phase Locked Loops: closed-loop feedback control system that maintains a generated signal in a fixed phase relationship to a reference signal • Phase Shifters: designed for use in power amplifier distortion compensation circuits in base station applications • Power Dividers/Combiners: utilized to equally split signals into in-phase signals as often found in balanced signal chains and local oscillator distribution networks • Receivers: electronic devices that change a radio signal from a transmitter into useful information • Switches: components that perform the change between the transmit and receive function, as well as the band function for cellular handsets • Synthesizers: devices that provide ultra-fine frequency resolution, fast switching speed, and low phase-noise performance • Timing Devices: wireless clocks and oscillators used in optical networking, data center and wireless base stations • Technical Ceramics: polycrystalline oxide materials used for a wide variety of electrical, mechanical, thermal, and magnetic applications 7 • Voltage Controlled Oscillators/Synthesizers: fully integrated, high performance signal source for high dynamic range transceivers • Voltage Regulators: generate a fixed level which ideally remains constant over varying input voltage or load conditions We believe we possess broad technology capabilities and one of the most complete wireless communications product portfolios in the industry.
Biggest changeOur Product Portfolio Our extensive product portfolio includes: • Amplifiers: the modules that strengthen the signal so that it has sufficient energy to reach a base station • Antenna Tuners: aperture and impedance tuning products that improve antenna performance across frequencies • Attenuators: circuits that allow a known source of power to be reduced by a predetermined factor (usually expressed as decibels) • Automotive Tuners and Digital Radios: tuners, data receivers, and digital radio coprocessors used in automotive infotainment systems • Wireless ASoC: an intelligent 2.4 GHz and 5GHz wireless radio integrated circuit that includes all the analog and digital functions optimized for building cognitive wireless audio headsets, headphones, and wireless speaker systems • DC/DC Converters: an electronic circuit which converts a source of direct current from one voltage level to another • Demodulators: a device or an RF block used in receivers to extract the information that has been modulated onto a carrier or from the carrier itself • Detectors: devices used to measure and control RF power in wireless systems • Digital Power Isolators: energy efficient solutions used in industrial control, solar inverters and hybrid/electric automotive drive trains • Diodes: semiconductor devices that pass current in one direction only • Directional Couplers: transmission coupling devices for separately sampling the forward or backward wave in a transmission line • Diversity Receive Modules: devices used to improve receiver sensitivity in high data rate applications • Filters: devices for recovering and separating mixed and modulated data in RF stages, including SAW, TC-SAW, and BAW filters • Front-end Modules: two or more functions co-packaged to optimize the performance, cost, and application suitability in products, including intermediate or radio frequency signal paths • Hybrid: a type of directional coupler used in radio and telecommunications • LED Drivers: devices which regulate the current through a light-emitting diode or string of diodes for the purpose of creating light • Low-Noise Amplifiers: devices used to reduce system noise figure in the receive chain • Mixers: devices that enable signals to be converted to a higher or lower frequency signal and thereby allowing the signals to be processed more effectively • Modulators: devices that take a baseband input signal and output a radio frequency modulated signal • Optocouplers/Optoisolators: semiconductor devices that allow signals to be transferred between circuits or systems while ensuring that the circuits or systems are electrically isolated from each other 8 • Phase Locked Loops: closed-loop feedback control system that maintains a generated signal in a fixed phase relationship to a reference signal • Phase Shifters: designed for use in power amplifier distortion compensation circuits in base station applications • Power Dividers/Combiners: utilized to equally split signals into in-phase signals as often found in balanced signal chains and local oscillator distribution networks • Power over Ethernet: enables both data and power to be sent over standard ethernet cable. • Power Isolators: digital, analog isolators, and isolated gate drivers used in industrial control, solar inverters, hybrid/electric automotive systems and charging stations • ProSLIC ® family of subscriber line interface circuits: provides complete analog telephone interfaces for premise equipment and enterprise • Receivers: electronic devices that change a radio signal from a transmitter into useful information (including broadcast receivers) • System In Package: complete system in a package, including modem, RF front-end, filtering, matching, timing generation – typically, fully certified by regulatory bodies, industry bodies and multi-service operators • Switches: components that perform the change between the transmit and receive function, as well as the band function for cellular handsets • Synthesizers: devices that provide ultra-fine frequency resolution, fast switching speed, and low phase-noise performance • Timing Devices: clock generators, oscillators, jitter attenuators, and buffers used in optical networking, data center, wireless base stations, industrial, and automotive applications • Voltage Controlled Oscillators/Synthesizers: fully integrated, high performance signal source for high dynamic range transceivers • Voltage Regulators: generate a fixed level which ideally remains constant over varying input voltage or load conditions We believe we possess broad technology capabilities and one of the most complete wireless communications product portfolios in the industry.
Competitive Conditions The competitive environment in the semiconductor industry is in a constant state of flux, with new products continually emerging and existing products approaching technological obsolescence. We compete on the basis of time-to-market, new 8 product innovation, quality, performance, price, compliance with industry standards, strategic relationships with customers and baseband vendors, personnel, and protection of our intellectual property.
Competitive Conditions The competitive environment in the semiconductor industry is in a constant state of flux, with new products continually emerging and existing products approaching technological obsolescence. We compete on the basis of time-to-market, new product innovation, quality, performance, price, compliance with industry standards, strategic relationships with customers and baseband vendors, personnel, and protection of our intellectual property.
The cancellation or deferral of product orders, the return of previously sold products, or overproduction due to a change in anticipated order volume could result in a reduction in revenue and us holding excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial condition.
The cancellation or deferral of product orders, the return of previously sold products, or overproduction due to a change in anticipated order volume could result in a reduction in revenue and us holding 10 excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial condition.
With the increasing adoption of 5G and the opportunity to enable more applications, we are growing our business beyond mobile devices (where we support all top-tier manufacturers, including the leading smartphone suppliers and key baseband vendors) into additional high-performance analog markets, including automotive, home and factory automation, data center, solar, wireless infrastructure, aerospace and defense, medical, smart energy, and wireless networking.
With the increasing adoption of 5G and the opportunity to enable more applications, we are growing our business beyond mobile devices (where we support leading top-tier manufacturers, including the leading smartphone suppliers and key baseband vendors) into additional high-performance analog markets, including automotive, home and factory automation, data center, solar, wireless infrastructure, aerospace and defense, medical, smart energy, and wireless 7 networking.
In addition, we believe that developing our employees’ skill sets and decision-making abilities—through challenging project assignments, formal training, mentorship, and recognition—is key not only to our employees’ job satisfaction and our retention efforts, but also to maintaining a strong leadership pipeline. 10
In addition, we believe that developing our employees’ skill sets and decision-making abilities—through challenging project assignments, formal training, mentorship, and recognition—is key not only to our employees’ job satisfaction and our retention efforts, but also to maintaining a strong leadership pipeline. 11
For further information regarding customer concentrations, see Note 15 to Item 8 of this Annual Report on Form 10-K. Intellectual Property and Proprietary Rights We own or have a license to use numerous United States and foreign patents and patent applications related to our products and our manufacturing operations and processes.
For further information regarding customer concentrations, see Note 14 to Item 8 of this Annual Report on Form 10-K. 9 Intellectual Property and Proprietary Rights We own or have a license to use numerous United States and foreign patents and patent applications related to our products and our manufacturing operations and processes.
Diversification We are diversifying our business by expanding our addressable markets and broadening our product portfolio to reach a wider array of global customers.
Diversification We are diversifying the reach of our business by expanding our addressable markets and broadening our product portfolio to serve a wider array of global customers.
The growth in research and development expenses were the result of increases in our internal product designs and product development activity for our target markets in each of these fiscal years.
The level of research and development expenses were the result of increases in our internal product designs and product development activity for our target markets in each of these fiscal years.
In these markets we leverage our scale, intellectual property, and worldwide distribution network, which spans more than 6,000 customers and 7,600 unique products. Delivering Operational Excellence We vertically integrate our supply chain where we can differentiate ourselves with highly specialized internal manufacturing capabilities or enter into alliances and strategic relationships for leading-edge technologies.
In these markets we leverage our scale, intellectual property, and worldwide distribution network, which spans more than 8,000 customers and 8,500 unique products. Delivering Operational Excellence We vertically integrate our supply chain where we can differentiate ourselves with highly specialized internal manufacturing capabilities or enter into alliances and strategic relationships for leading-edge technologies.
In the fiscal years ended September 30, 2022 (“fiscal 2022”), October 1, 2021 (“fiscal 2021”), and October 2, 2020 (“fiscal 2020”), Apple, through sales to multiple distributors and contract manufacturers for multiple applications including smartphones, tablets, desktop and notebook computers, watches, and other devices, constituted more than ten percent of our net revenue.
In the fiscal years ended September 29, 2023 (“fiscal 2023”), September 30, 2022 (“fiscal 2022”), and October 1, 2021 (“fiscal 2021”), Apple, through sales to multiple distributors and contract manufacturers for multiple applications including smartphones, tablets, desktop and notebook computers, watches, and other devices, constituted more than ten percent of our net revenue.
Over the past two decades, Skyworks has made critical investments to power this connectivity transformation, addressing key network technologies from cellular to advanced Wi-Fi ® , enhanced GPS, and Bluetooth ® , among others. Capitalizing on both organic growth and strategic acquisitions, we are gaining momentum in high-growth verticals, while at the same time, diversifying our revenue and customer set.
Over the past two decades, Skyworks has made critical investments to power this connectivity transformation, addressing key network technologies from cellular to advanced Wi-Fi ® , enhanced GPS, and Bluetooth ® , among others. Capitalizing on both organic growth and strategic acquisitions, we are targeting high-growth verticals, while at the same time, seeking to diversify our revenue and customer set.
Research and Development Our products and markets demand rapid technological advancements requiring a continuous effort to enhance existing products and develop new products and technologies. Accordingly, we maintain a high level of research and development activity. We invested $617.9 million, $532.3 million, and $464.1 million in research and development during fiscal 2022, fiscal 2021, and fiscal 2020, respectively.
Research and Development Our products and markets demand rapid technological advancements requiring a continuous effort to enhance existing products and develop new products and technologies. Accordingly, we maintain a high level of research and development activity. We invested $606.8 million, $617.9 million, and $532.3 million in research and development during fiscal 2023, fiscal 2022, and fiscal 2021, respectively.
Major elements of our strategy include: Industry-Leading Technology As the industry migrates to more complex 5G architectures across a multitude of wireless applications, we are well-positioned to help mobile device manufacturers handle growing levels of system complexity across both the transmit and receive chains.
Major elements of our strategy include: Industry-Leading Technology As the industry migrates to more complex 5G architectures across a multitude of wireless applications, we are poised to help our customers handle growing levels of system complexity across both the transmit and receive chains.
Due to industry practice, which allows customers to cancel orders with limited advance notice to us prior to shipment, and with little or no penalty, we believe that backlog as of any particular date may not be a reliable indicator of our future revenue levels.
In the absence of a sales agreement, the Company’s standard terms and conditions apply. Due to industry practice, which allows customers to cancel orders with limited advance notice to us prior to shipment, and with little or no penalty, we believe that backlog as of any particular date may not be a reliable indicator of our future revenue levels.
Our SEC filings are also available to the public at www.sec.gov. Industry Background Wireless connectivity is expanding on a global basis, underscoring the critical nature of our mission of connecting everyone and everything, all the time.
The information contained on our website is not incorporated by reference in this Annual Report. Our SEC filings are also available to the public at www.sec.gov. Industry Background Wireless connectivity is expanding on a global basis, underscoring the critical nature of our mission of connecting everyone and everything, all the time.
We have a rich heritage in analog systems design and have spent years investing in key technologies and resources. Our strength is underpinned by world-class performance and scale across a broad array of capabilities that include advanced TC-SAW and BAW filters, an expanded family of MIMO, ultra-high band, and diversity receive modules, timing devices, and digital power isolators.
Our strength is underpinned by world-class performance and scale across a broad array of capabilities that include advanced TC-SAW and BAW filters, an expanded family of MIMO, ultra-high band, and diversity receive modules, timing devices, and digital power isolators.
As of September 30, 2022: • Our workforce was distributed geographically approximately as follows: 55% in Mexico, 24% in the United States, 20% in Asia, 1% in Canada, and less than 1% in Europe. • Our workforce was distributed by function approximately as follows: 47% in individual contributor manufacturing roles, 32% in engineering or technician roles, 10% in managerial roles, and 11% in professional or other administrative roles. • Approximately 4,100 of our employees in Mexico, 290 of our employees in Singapore, and 460 of our employees in Japan were covered by collective bargaining and other union agreements.
As of September 29, 2023: • Our workforce was distributed geographically approximately as follows: 54% in Mexico, 24% in the United States, 20% in Asia, 1% in Canada, and less than 1% in Europe. • Our workforce was distributed by function approximately as follows: 43% in individual contributor manufacturing roles, 33% in engineering or technician roles, 11% in managerial roles, and 12% in professional or other administrative roles. • Approximately 3,420 of our employees in Mexico, 650 of our employees in Singapore, and 460 of our employees in Japan were covered by collective bargaining and other union agreements.
The combination of agile, flexible capacity, and world-class module manufacturing and scale advantage allows us to achieve low product costs while integrating multiple technologies into highly sophisticated multi-chip modules and helping to ensure stable supply to our global customer base. 6 Maintaining a Performance-Driven Culture We consider our people and corporate culture to be a competitive advantage and a key component of our corporate strategy.
The combination of agile, flexible capacity, and world-class module manufacturing and scale advantage allows us to achieve low product costs while integrating multiple technologies into highly sophisticated multi-chip modules and helping to ensure stable supply to our global customer base.
Together, our industry-leading technology enables us to deliver the highest levels of product performance and integration. Customer Relationships Given our scale and technology leadership, we are engaged with all of the major original equipment manufacturers (“OEMs”), smartphone providers, and baseband reference design partners in the analog and mixed-signal semiconductor industry.
Customer Relationships Given our scale and technology leadership, we are engaged with leading original equipment manufacturers (“OEMs”), smartphone providers, and baseband reference design partners in the analog and mixed-signal semiconductor industry.
We make available free of charge on our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as practicable after we electronically submit such material to the SEC. The information contained on our website is not incorporated by reference in this Annual Report.
We make available free of charge on our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as practicable after we electronically file such material with, or furnish it to, the SEC.
(“Apple”), Arcadyan, Arris, Bose, Cisco, DJI, Ericsson, Garmin, Gemalto (a Thales company), General Electric, Fibocom, Google, Honeywell, Itron, Lenovo, LG Electronics, Microsoft, Motorola, NETGEAR, Nokia, Northrop Grumman, OPPO, Rockwell Collins, Sagemcom, Samsung, Sierra Wireless, Sonos, Sony, Technicolor, Telit, VIVO, Xiaomi, and ZTE. Our competitors include Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm, and Texas Instruments.
(“Apple”), Arcadyan, Arris, Bose, Ciena, Cisco, DJI, Ericsson, Fibocom, Garmin, Gemalto (a Thales company), General Electric, Google, Honeywell, Itron, Lenovo, LG Electronics, Microsoft, Motorola, NETGEAR, Nokia, Northrop Grumman, OPPO, Rockwell Collins, Sagemcom, Samsung, Schneider Electric, Sierra Wireless, Sonos, Sony, Technicolor, Telit, Tesla, TP-Link, VIVO, Xiaomi, and ZTE.
We create key performance indicators that align employee efforts and link responsibilities with performance measurement. Accountability is paramount, and we compensate our employees through a pay-for-performance methodology.
Maintaining a Performance-Driven Culture We consider our people and corporate culture to be a competitive advantage and a key component of our corporate strategy. We create key performance indicators that align employee efforts and link responsibilities with performance measurement. Accountability is paramount, and we compensate our employees through a pay-for-performance methodology.
Government regulations are subject to change in the future, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business, results of operations, or financial condition. 9 Seasonality Sales of our products are subject to seasonal fluctuation and periods of increased demand in end-user consumer applications, such as smartphones and tablet computing devices.
Government regulations are subject to change in the future, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business, results of operations, or financial condition.
We operate worldwide with engineering, manufacturing, sales, and service facilities throughout Asia, Europe, and North America. Our Internet address is www.skyworksinc.com.
Our competitors include Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm, and Texas Instruments. We operate worldwide with engineering, manufacturing, sales, and service facilities throughout Asia, Europe, and North America. Our Internet address is www.skyworksinc.com.
In July 2021, we acquired the Infrastructure and Automotive business of Silicon Laboratories Inc. (the “Acquisition”). The Acquisition has accelerated our expansion into high-growth market segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication, data center, automotive, smart home, and several other applications. Our key customers include Amazon, Apple Inc.
Targeted investments in next-generation technology and solutions, exceptional technical talent, and world-class fabrication capabilities have accelerated our expansion into high-growth market segments, including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication, data center, automotive, smart home, and several other applications. Our key customers include Amazon, Apple Inc.
This results in an extraordinary need for faster speeds, increased bandwidth and capacity, significantly lower latency, and more reliable and secure wireless connectivity. The speed and ultra-low latency characteristics inherent in 5G technology are dramatically altering wireless connectivity, creating a market for diverse and transformative applications, and changing how individuals live, work, play, and learn.
The speed and ultra-low latency characteristics inherent in 5G technology are dramatically altering wireless connectivity, creating a market for diverse and transformative applications, and changing how individuals live, work, play, and learn. Most of the world’s largest economies are implementing commercial 5G networks, and the world’s leading smartphone manufacturers have launched multiple generations of 5G-enabled devices.
A widening range of use cases is driving an insatiable demand for ubiquitous wireless data across a broad array of applications, including remote work, entertainment, fitness, virtual education and meetings, telemedicine, factory automation, connected cars, mobile internet, cloud gaming, and AR/VR technology.
A widening range of use cases is driving an insatiable demand for ubiquitous wireless data across a broad array of applications.
By 2030, we expect there will be 650 million connected cars worldwide, each consuming 25 times the data that we see in today’s smartphones. We are helping to enable these opportunities with highly customized solutions supporting a broad set of wireless systems and protocols including cellular, 5G, Wi-Fi, GPS, Bluetooth, Accutime™, HD-Radio™, LoRa®, Thread®, and Zigbee®.
Skyworks helps facilitate these opportunities with highly customized solutions that support a broad set of wireless systems and protocols including cellular, 5G, Wi-Fi ® , GPS, Bluetooth ® , Accutime™, HD-Radio™, LoRa ® , Thread ® , and Zigbee ® .
Employees Our workforce consists of approximately 11,150 employees located around the world, more than 99% of whom are full-time employees.
The lowest demand for our products generally occurs in our second fiscal quarter ending in March and the third fiscal quarter ending in June. Employees Our workforce consists of approximately 9,750 employees located around the world, more than 99% of whom are full-time employees.
We also hold strong technology leadership positions in passive devices, advanced integration, including proprietary shielding and 3-D die stacking, as well as SAW, TC-SAW, and BAW filters. Our product portfolio is reinforced by a library of approximately 4,600 worldwide patents and other intellectual property that we own and control.
We believe that we offer the broadest portfolio of radio and analog solutions from the transceiver to the antenna as well as all required manufacturing process technologies. We also hold strong technology leadership positions in passive devices, advanced integration, including proprietary shielding and 3-D die stacking, as well as SAW, TC-SAW, and BAW filters.
The highest demand for our products generally occurs in our first fiscal quarter ending in December and the fourth fiscal quarter ending in September. The lowest demand for our products generally occurs in our second fiscal quarter ending in March and the third fiscal quarter ending in June.
Seasonality Sales of our products are subject to seasonal fluctuation and periods of increased demand in end-user consumer applications, such as smartphones and tablet computing devices. The highest demand for our products generally occurs in our first fiscal quarter ending in December and the fourth fiscal quarter ending in September.
Delivering on these design challenges requires broad competencies including signal transmission and conditioning, the ability to ensure seamless hand-offs between multiple standards, power management, voltage regulation, battery charging, advanced filtering, and tuning. We are at the forefront of this new era of connectivity, delivering the solutions that help enable the true potential of 5G and the IoT.
Solving Connectivity Challenges Highly integrated semiconductor solutions are pivotal in deploying next-generation standards, resolving analog, mixed-signal, and RF complexities that challenge existing hardware and network infrastructure. Addressing these design challenges requires diverse competencies including signal transmission, seamless hand-offs between multiple standards, power management, voltage regulation, battery charging, advanced filtering, and tuning.
The trend towards increasing front-end and analog design challenges in smartphones and other platforms plays directly into our core strengths and positions us to address these challenges. We believe that we offer the broadest portfolio of radio and analog solutions from the transceiver to the antenna as well as all required manufacturing process technologies.
Crucially, they aim to bring us closer to achieving reliable low latency, ideal for massive machine communications, and introduces non-terrestrial networks that enable satellite connectivity for emergency applications. The trend towards increasing front-end and analog design challenges in smartphones and other platforms plays directly into our core strengths and positions us to address these challenges.
Most of the world’s largest economies are implementing commercial 5G networks, and the world’s leading smartphone manufacturers have launched multiple generations of 5G-enabled devices. We see a continued expansion in data consumption, dependent on seamless, reliable, and ubiquitous wireless connectivity. A few statistics illustrate this point.
We see a continued expansion in data consumption, dependent on seamless, reliable, and ubiquitous wireless connectivity. A few statistics illustrate this point. According to the 2023 Ericsson Mobility Report, global mobile data is expected to double every three years, driven by new users, innovative services, and the convergence of AI and 5G technology.
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According to the 2021 Ericsson Mobility Report, global wireless data traffic is expected to grow at a 27% annual rate over the next five years. Machine-to-machine connections, the fastest-growing IoT category, is expected to soon surpass 15 billion devices.
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The advancement of 5G adoption, IoT, connectivity for everyone, automotive electrification and safety, as well as augmented reality and virtual reality technology, all demand faster speeds, increased bandwidth and capacity, significantly lower latency, and more reliable and secure wireless connectivity.
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In addition, next-generation Wi-Fi 6 and 6E products are emerging as the standard offering across enterprise, carrier, and retail segments and are expected to accelerate the deployment of IoT devices. Looking forward, we see significant growth opportunities for our industry and for Skyworks.
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Machine-to-machine connections, the fastest-growing IoT category, is expected to soon surpass 15 billion devices. By 2030, we anticipate 650 million connected cars worldwide, each consuming 25 times the data seen in today’s smartphones.
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The key catalyst is the increasing demand for wireless data as the world embraces 5G and other advanced connectivity technologies. 5 Solving Connectivity Challenges Highly integrated semiconductor solutions are playing an increasingly essential and pivotal role in the deployment of next-generation standards by resolving the daunting analog, mixed-signal, and RF complexities that are challenging the capabilities of existing hardware and the supporting network infrastructure.
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Additionally, Wi-Fi ® 7, the next generation of Wi-Fi ® technology, complements 5G by providing high-speed wireless connectivity in local environments. These faster data rates and improved efficiency cater to the growing number of devices reliant on wireless networks. 6 We believe AI can be a catalyst for more efficient wireless communications.
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In the absence of a sales agreement, the Company’s standard terms and conditions apply. We also maintain Skyworks-owned finished goods inventory at certain customer “hub” locations. We do not recognize revenue until these customers consume the Skyworks-owned inventory from these hub locations.
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From endpoint devices to data centers, generative AI applications will drive the need for higher speed and higher bandwidth Ethernet networks. We expect this will help increase the demand for our precision timing solutions.
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Finally, with the rapid transition towards electrification and advanced safety in vehicles, we are focused on high growth segments and content opportunities, including (i) power isolation chips for on-board chargers, powertrain, and for battery management systems in electric vehicles, (ii) connectivity, with telematics and other solutions being enabled by 4G/5G cellular engines, Wi-Fi ® , Bluetooth ® , Ultra-wide band, Ethernet, and GPS, and (iii) in-vehicle infotainment systems, driven by digital radio coprocessors, and solutions supporting advanced driver-assistance systems and autonomous driving.
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We are at the forefront of this new era of connectivity, delivering the solutions that help enable the true potential of 5G and IoT. We have a rich heritage in analog systems design and have spent years investing in key technologies and resources.
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The trend towards increasing front-end and analog design challenges in smartphones and other platforms plays directly into our core strengths. The forthcoming releases of 5G technologies offer significant upgrades for smartphones and IoT devices. These advancements will deliver more bandwidth, faster speeds, and enable applications like virtual reality, augmented reality, live video streaming, and seamless IoT connectivity.
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Our product portfolio is reinforced by a library of approximately 4,900 worldwide patents and other intellectual property that we own and control. Together, our industry-leading technology enables us to deliver the highest levels of product performance and integration.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+6 added−15 removed157 unchanged
Biggest changeSuch fluctuations may be influenced by many factors, including: • the volatility of the financial markets, • uncertainty regarding the prospects of the domestic and foreign economies, • instability in global credit and financial markets, • our performance and prospects, and the performance and prospects of our major customers and competitors, • the extent of the impact of the COVID-19 pandemic, • our revenue concentrations with relatively few customers, • the depth and liquidity of the market for our common stock, • the inclusion, exclusion, or removal of our stock from market indices, such as the S&P 500 Index, • our stock repurchase and dividend activities, • the timing of our repayment of outstanding indebtedness, • investor perception of us and the industry in which we operate, • changes in the market valuations of other companies, including, but not limited to, those in our industry, • changes in earnings estimates, price targets, or buy/sell recommendations by analysts, • domestic and international political conditions, • domestic and international tax, fiscal, and trade policy decisions, and • our ability to successfully identify, acquire, and integrate acquisition candidates. 24 Public stock markets have experienced price and trading volume volatility.
Biggest changeSuch fluctuations may be influenced by many factors, including: • uncertainty regarding the condition and prospects of the domestic and foreign economies, • the volatility of the financial markets, • instability in global credit and financial markets, • our performance and prospects, and the performance and prospects of our major customers and competitors, • our revenue concentrations with relatively few customers, • our stock repurchase and dividend activities, • the timing of our repayment of outstanding indebtedness, • investor perception of us and the industry in which we operate, • changes in the market valuations of other companies, including, but not limited to, those in our industry, • changes in earnings estimates, price targets, or buy/sell recommendations by analysts, • the depth and liquidity of the market for our common stock, • the exclusion or removal of our stock from market indices, such as the S&P 500 Index, • domestic and international political conditions, • the extent of the impact of the COVID-19 pandemic, • domestic and international tax, fiscal, and trade policy decisions, and • our ability to successfully identify, acquire, and integrate acquisition candidates.
These factors include, among others: • delays in the widespread deployment of commercial 5G networks, • changes in end-user demand for the products manufactured and sold by our customers, • the effects of competitive pricing pressures, including decreases in average selling prices of our products, • production capacity levels and fluctuations in manufacturing yields, • availability and cost of materials and services from our suppliers, • the gain or loss of significant customers, • our ability to develop, introduce, and market new products and technologies on a timely basis, • market acceptance of our products and our customers’ products (including, but not limited to, market acceptance of new, emerging technologies), • new product and technology introductions by competitors, • delays in the adoption of standards by standard-setting bodies and delays in the commercial deployment or consumer adoption of certain technologies, • actions by government regulators to restrict or delay the availability of sufficient spectrum for wireless technologies, including technologies that utilize unlicensed spectrum and/or shared spectrum, • changes in consumers’ purchasing behaviors, including the rates at which they replace smartphones and other devices that utilize our products, • changes to promotions, rebates, and discounts offered by carriers in certain geographic regions for smartphones and other devices that utilize our products, • increasing industry consolidation among our competitors, • changes in the mix of products produced and sold, and • intellectual property disputes, including those concerning payments associated with the licensing and/or sale of intellectual property, and related remedies (e.g., monetary damages, injunctions, or exclusion orders affecting our or our customers’ products).
These factors include, among others: • delays in the widespread deployment of commercial 5G networks and other new technologies, • changes in end-user demand for the products manufactured and sold by our customers, • the effects of competitive pricing pressures, including decreases in average selling prices of our products, • production capacity levels and fluctuations in manufacturing yields, • availability and cost of materials and services from our suppliers, • the gain or loss of significant customers, • our ability to develop, introduce, and market new products and technologies on a timely basis, • market acceptance of our products and our customers’ products including, but not limited to, market acceptance of new, emerging technologies, • new product and technology introductions by competitors, • delays in the adoption of standards by standard-setting bodies and delays in the commercial deployment or consumer adoption of certain technologies, • actions by government regulators to restrict or delay the availability of sufficient spectrum for wireless technologies, including technologies that utilize unlicensed spectrum and/or shared spectrum, • changes in consumers’ purchasing behaviors, including the rates at which they replace smartphones and other devices that utilize our products, • changes to promotions, rebates, and discounts offered by carriers in certain geographic regions for smartphones and other devices that utilize our products, • increasing industry consolidation among our competitors, • changes in the mix of products produced and sold, and 14 • intellectual property disputes, including those concerning payments associated with the licensing and/or sale of intellectual property, and related remedies (e.g., monetary damages, injunctions, or exclusion orders affecting our or our customers’ products).
Moreover, if such transactions are consummated, they could result in: • issuances of equity securities dilutive to our stockholders, • restructuring or other impairment write-offs, • the incurrence of substantial debt and assumption of unknown liabilities, • the potential loss of key employees from the acquired company, 18 • recognition of additional liabilities known or unknown at the time of acquisition, • amortization expenses related to intangible assets, and • the diversion of management’s attention from other business concerns.
Moreover, if such transactions are consummated, they could result in: • issuances of equity securities dilutive to our stockholders, • restructuring or other impairment write-offs, • the incurrence of substantial debt and assumption of unknown liabilities, • the potential loss of key employees from the acquired company, • recognition of additional liabilities known or unknown at the time of acquisition, • amortization expenses related to intangible assets, and • the diversion of management’s attention from other business concerns.
Regardless of our actions: 22 • the steps we take to prevent misappropriation, infringement, dilution, or other violation of our intellectual property or the intellectual property of our customers, suppliers, or other third parties may not be successful, • any of our existing or future patents, copyrights, trademarks, trade secrets, or other intellectual property rights may be challenged, invalidated, deemed unenforceable, or circumvented, and • we may be contractually prohibited, or otherwise discouraged, by certain customers from pursuing remedies for third parties’ violations of our intellectual property.
Regardless of our actions: • the steps we take to prevent misappropriation, infringement, dilution, or other violation of our intellectual property or the intellectual property of our customers, suppliers, or other third parties may not be successful, • any of our existing or future patents, copyrights, trademarks, trade secrets, or other intellectual property rights may be challenged, invalidated, deemed unenforceable, or circumvented, and • we may be contractually prohibited, or otherwise discouraged, by certain customers from pursuing certain remedies for third parties’ violations of our intellectual property.
If litigation were to result in an adverse ruling, we could be required to: • pay substantial damages, • cease the manufacture, import, use, sale, or offer for sale of infringing products or processes, • discontinue the use of infringing technology, • expend significant resources to develop an alternate non-infringing technology, and • license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms.
If litigation were to result in an adverse ruling, we could be required to: • pay substantial damages, • cease the manufacture, import, use, sale, or offer for sale of infringing products or processes, • discontinue the use of infringing technology, • expend significant resources to develop an alternate non-infringing technology, and 24 • license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms.
In addition, changes in the political environment, governmental policies, United States-China relations, or China-Taiwan relations could result in revisions to laws or regulations or their interpretation and enforcement, exposure of our proprietary intellectual property, increased taxation, restrictions on imports, import duties, or currency revaluations, any of which could have an adverse effect on our business plans and operating results.
In addition, changes in the political environment, economic environment, governmental policies, United States-China relations, or China-Taiwan relations could result in revisions to laws or regulations or their interpretation and enforcement, exposure of our proprietary intellectual property, increased taxation, restrictions on imports, import duties, or currency revaluations, any of which could have an adverse effect on our business plans and operating results.
Many of our competitors benefit from: • long presence in key markets, • brand recognition, • high levels of customer satisfaction, • vertical integration, 19 • strong baseband partnership/participation in reference designs, • a broad product portfolio allowing them to bundle product offerings, • ownership or control of key technology or intellectual property, and • strong financial, sales and marketing, manufacturing, distribution, technical, or other resources.
Many of our competitors benefit from: • long presence in key markets, • brand recognition, • high levels of customer satisfaction, • vertical integration, • strong baseband partnership/participation in reference designs, • a broad product portfolio allowing them to bundle product offerings, • ownership or control of key technology or intellectual property, and • strong financial, sales and marketing, manufacturing, distribution, technical, or other resources.
We compete with international and United States semiconductor manufacturers of all sizes in terms of resources and market share, including, but not limited to, Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm, and Texas Instruments. We currently face significant competition in our markets and expect that intense price and product competition will continue.
We compete with 19 international and United States semiconductor manufacturers of all sizes in terms of resources and market share, including, but not limited to, Analog Devices, Broadcom, Cirrus Logic, Murata Manufacturing, NXP Semiconductors, Qorvo, Qualcomm, and Texas Instruments. We currently face significant competition in our markets and expect that intense price and product competition will continue.
Furthermore, additional competitors may enter our markets as a result of growth opportunities in communications electronics, the trend toward global expansion by foreign and domestic competitors, and technological and public policy changes (including national or regional policies, and/or state-sponsored investments, intended to develop and support localized competitors).
Furthermore, additional competitors may enter our markets as a result of growth opportunities in electronics, the trend toward global expansion by foreign and domestic competitors, and technological and public policy changes (including national or regional policies, and/or state-sponsored investments, intended to develop and support localized competitors).
Bureau of Industry and Security’s Entity List (the “Entity List”), which has, and could in the future, limit our ability to sell to certain of those entities and to third parties that do business with those entities. These restrictions have negatively impacted, and may continue to negatively impact, sales of our products.
Bureau of Industry and Security’s Entity List (the “Entity List”), which has limited, and could in the future limit, our ability to sell to certain of those entities and to third parties that do business with those entities. These restrictions have negatively impacted, and may continue to negatively impact, sales of our products.
While we make reasonable attempts to prevent such unauthorized access or misappropriation, we may be unable to anticipate, detect, or stop the methods used, or we may be unable to prevent the release of our confidential and/or proprietary information or that of a third party. We are subject to the risks of licensing third-party intellectual property.
While we make reasonable attempts to prevent such unauthorized access or misappropriation, we may be unable to anticipate, detect, or stop the methods used, or we may be unable to prevent the release of our confidential and/or proprietary information or that of a third party. 23 We are subject to the risks of licensing third-party intellectual property.
Changes in our interpretations and assumptions, as well as additional guidance issued under these laws, could increase income tax liabilities and/or reduce certain tax benefits. In addition, it is uncertain if and to what extent various states will conform to changes to tax law.
Changes in our interpretations and assumptions, as well as additional guidance issued under these laws, could increase income tax liabilities and/or reduce certain tax benefits. In addition, it is uncertain if and to what extent various states will conform to changes to federal tax law.
On an ongoing basis, we review investment, alliance, and acquisition prospects that would complement our product offerings, augment our market coverage, or enhance our technological capabilities. We may not be able to identify and consummate suitable investment, alliance, or acquisition transactions in the future.
On an ongoing basis, we review investment, alliance, and acquisition prospects that would complement or expand our product offerings, augment our market coverage, or enhance our technological capabilities. We may not be able to identify and consummate suitable investment, alliance, or acquisition transactions in the future.
Even after a design win, 14 the customer is not obligated to purchase our products and can choose at any time to reduce or cease use of our products, for example, if its own products are not commercially successful, or for any other reason.
Even after a design win, the customer is not obligated to purchase our products and can choose at any time to reduce or cease use of our products, for example, if its own products are not commercially successful, or for any other reason.
These disruptions may result from electrical power outages, water shortages, fire, earthquake, flooding, war, acts of terrorism, health advisories or risks, or other natural or man-made disasters, as well as equipment maintenance, repairs, and/or upgrades.
These disruptions may result from electrical power outages or fluctuations, water shortages, fire, earthquake, flooding, war, acts of terrorism, health advisories or risks, or other natural or man-made disasters, as well as equipment maintenance, repairs, and/or upgrades.
Changes in tax laws and regulations could have an adverse impact on our operating results. We are subject to taxation in many different countries and localities worldwide. To the extent the tax laws and regulations in these various countries and localities could change, our tax liability in general could increase.
Changes in tax laws and regulations could have an adverse impact on our operating results. We are subject to taxation in many different countries and localities worldwide. To the extent the tax laws and regulations in these various countries and localities change, our tax liability could increase.
Furthermore, countries where we are subject to 13 taxes, including the United States, evaluate their tax policies and rules on a regular basis, and we may see significant changes in legislation and regulations concerning taxation.
Furthermore, countries where we are subject to taxes, including the United States, evaluate their tax policies and rules on a regular basis, and we may see significant changes in legislation and regulations concerning taxation.
In addition to the provisions in our certificate of incorporation and by-laws, Section 203 of the Delaware General Corporation Law generally provides that a corporation may not engage in any business combination with any interested stockholder during the three-year period following the time that such stockholder becomes an interested stockholder, unless a majority of the directors then in office approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder or specified stockholder approval requirements are met. 25 ITEM 1B.
In addition to the provisions in our certificate of incorporation and by-laws, Section 203 of the Delaware General Corporation Law generally provides that a corporation may not engage in any business combination with any interested stockholder during the three-year period following the time that such stockholder becomes an interested stockholder, unless a majority of the directors then in office approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder or specified stockholder approval requirements are met. 26 ITEM 1B.
It is costly, time-consuming, and requires significant resources to comply with the numerous, and sometimes conflicting, legal regimes in the jurisdictions in which we conduct business on matters as diverse as anti-corruption, anti-bribery, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, competition, data privacy and protection, employment, and labor relations.
It is costly, time-consuming, and requires significant resources to comply with the numerous, and sometimes conflicting, legal regimes in the jurisdictions in which we conduct business on matters as diverse as anti-corruption, anti-bribery, import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, immigration, intellectual property matters, internal and disclosure control obligations, securities regulation, competition, data privacy and protection, employment, and labor relations.
Additionally, on May 26, 2021, the Company issued $500 million of its 0.900% 2023 Notes, $500 million of its 1.800% 2026 Notes, and $500 million of its 3.000% 2031 Notes in a public offering.
Additionally, on May 26, 2021, the Company issued $500 million of its 0.900% 2023 Notes, $500 million of its 1.800% 2026 Notes, and $500 million of its 3.000% 2031 Notes in a public offering (the “Notes”).
Our operating results depend largely on our ability to continue to cost-effectively introduce new and enhanced products on a timely basis, both within our traditional markets and in new, expanded, or adjacent markets.
Our operating results depend largely on our ability to continue to cost-effectively introduce new and enhanced 20 products on a timely basis, both within our traditional markets and in new, expanded, or adjacent markets.
Although we maintain relationships with suppliers located around the world with the objective of ensuring that we have adequate sources for the supply of raw materials and components for our manufacturing needs, increases in demand from the semiconductor industry for such raw materials and components (including, but not limited to, precious and rare earth metals), as well as increased demand for commodities in general, can result in tighter supplies and higher costs.
Although we maintain relationships with suppliers located around the world with the objective of ensuring that we have adequate sources for the supply of raw materials and components for our manufacturing needs, increases in demand from the semiconductor industry for such raw materials and components (including, but not limited to, gallium, germanium, and precious and rare earth metals), as well as increased demand for commodities in general, can result in tighter supplies and higher costs.
Such an incident could, among other things, also damage our reputation, impair our ability to attract and retain our customers, impact our stock price, and materially damage our supplier relationships.
Such an incident could, 22 among other things, also damage our reputation, impair our ability to attract and retain our customers, impact our stock price, and materially damage our supplier relationships.
Furthermore, downturns in the semiconductor industry may be prolonged, and any extended delay or failure of the market to recover from an economic downturn would materially and adversely impact our business, results of operations, and financial condition, which could adversely affect our stock price. The wireless communications and analog semiconductor markets are characterized by significant competition.
Furthermore, downturns in the semiconductor industry may be prolonged, and any extended delay or failure of the market to recover from an economic downturn would materially and adversely impact our business, results of operations, and financial condition, which could adversely affect our stock price. The wireless communications, analog and mixed-signal semiconductor markets are characterized by significant competition.
Our products are not sold directly to the end user but are components or subsystems of other products. As a result, we rely on OEMs and ODMs of wireless communications electronics products to select our products from among alternative offerings to be designed into their equipment. Without these “design wins,” we would have difficulty selling our products.
Our products are not sold directly to the end user but are components or subsystems of other products. As a result, we rely on OEMs and ODMs of electronics products to select our products from among alternative offerings to be designed into their equipment. Without these “design wins,” we would have difficulty selling our products.
From time to time, we 23 are, and may become, involved in litigation. We are the plaintiff in some of these actions and the defendant in others. Such actions could result in the imposition of various remedies such as injunctions or monetary damages, which if awarded could materially harm our business.
From time to time, we are, and may become, involved in litigation. We are the plaintiff in some of these actions and the defendant in others. Such actions could result in the imposition of various remedies such as injunctions or monetary damages, which if awarded could materially and adversely harm our business.
We may not be able to develop and introduce new or enhanced wireless communications and analog semiconductor products in a timely and cost-effective manner, and our products may not satisfy customer requirements or achieve market acceptance, or we may not be able to anticipate new industry standards and technological changes.
We may not be able to develop and introduce new or enhanced wireless communications, analog and mixed-signal semiconductor products in a timely and cost-effective manner, and our products may not satisfy customer requirements or achieve market acceptance, or we may not be able to anticipate new industry standards and technological changes.
We have suppliers located outside the United States, including third-party packaging, assembly, and test facilities and semiconductor foundries located in the Asia-Pacific region. We also operate our own wafer fabrication facilities in Osaka, Japan, as well as packaging, assembly, and test facilities in Singapore and in Mexicali, Mexico.
We have suppliers located outside the United States, including third-party packaging, assembly, and test facilities and semiconductor foundries located in the Asia-Pacific region. We also operate our own wafer processing facilities in Osaka, Japan, as well as packaging, assembly, and test facilities in Singapore and in Mexicali, Mexico.
On May 21, 2021, the Company, as borrower, entered into a term credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $1.0 billion Term Loan Facility.
On May 21, 2021, the Company, as borrower, entered into a term credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $1.0 billion term loan facility (the “Term Loan Facility”).
These include, but are not limited to, risks regarding: • Recession or economic downturn globally or in the jurisdictions in which we do business, • currency controls and currency exchange rate fluctuations, including increases or decreases in commodities prices related to such fluctuations, • inflation, as well as changes in existing and expected rates of inflation, which may vary across the jurisdictions in which we do business, • interest rates, as well as changes in existing and expected interest rates, which may vary across the jurisdictions in which we do business, • global, regional, and local economic and political conditions, including, but not limited to, social, economic, political, and supply chain instability related to the uncertainty regarding the relationships among the United States, China, Taiwan, Russia, Mexico, North Korea, Middle Eastern countries, other foreign countries, and the international community at large, as well as related to armed conflicts, such as the conflict between Russia and Ukraine, that exist, or in the future could exist, in various jurisdictions around the world, • restrictive governmental actions (such as restrictions on transfer of funds, restrictions on individuals’ movement, including travel restrictions, quarantines, lockdowns, and curfews, and trade protection measures, including export duties, quotas, customs duties, border taxes, border closures, increased import or export controls, and tariffs), or actions by non-governmental individuals and groups (such as protests, boycotts, insurgencies, organized crime, and general civil unrest), that could negatively impact trade between, or increase the cost of operating in, the countries in which we do business, • labor market conditions and laws, • disruptions of capital and trading markets, • difficulty in collecting, or failure to collect, accounts receivable, as well as longer collection periods, • changes in, or non-compliance with, legal or regulatory import/export requirements, including restrictions on selling to certain customers or into certain jurisdictions, • natural disasters and severe weather events, including, but not limited to, earthquakes, wildfires, droughts, hurricanes, tsunamis, rising sea levels, as well as other impacts of climate change, • acts of terrorism, widespread illness or other deterioration of public health conditions, and war, • misappropriation or other unauthorized transfers of our electronic information and breaches of our information systems, as well as the potential lack of adequate remedies in certain jurisdictions, • difficulty in engaging distribution partners or obtaining sales or other business support in certain jurisdictions, • cultural differences in the conduct of business, • direct or indirect government actions, subsidies, or policies aimed at supporting local industry, • the laws and policies of the United States and other countries affecting trade, foreign investment and loans, foreign travel, and import or export licensing requirements, including, but not limited to, prohibitions on certain trade and other activities in China, Russia, Belarus, and portions of Ukraine, • withdrawal from, or renegotiation of, existing trade agreements by the United States (or other jurisdictions) potentially affecting Mexico, China, and other countries in which we do business, • changes in current or future tax law or regulations or new interpretations thereof, by federal or state agencies or foreign governments, • changes in the effective tax rate as a result of our overall profitability and mix of earnings in countries with differing statutory tax rates, • results of audits and examination of previously filed tax returns, and 11 • limitations on our ability under local laws to protect or enforce our intellectual property rights in a particular foreign jurisdiction.
These include, but are not limited to, risks regarding: • recession or economic downturn globally or in the jurisdictions in which we do business, • currency controls and currency exchange rate fluctuations, including increases or decreases in commodities prices related to such fluctuations, • inflation or deflation, as well as changes in existing and expected rates of inflation or deflation, which may vary across the jurisdictions in which we do business, • interest rates, as well as changes in existing and expected interest rates, which may vary across the jurisdictions in which we do business, • global, regional, and local economic and political conditions, including, but not limited to, social, economic, political, and supply chain instability related to the uncertainty regarding the relationships among the United States, China, Taiwan, Russia, Mexico, North Korea, Israel, other Middle Eastern countries, Japan, Singapore, other foreign countries, and the international community at large, as well as related to armed conflicts, such as the conflict between Russia and Ukraine and the conflicts in Israel and other Middle Eastern countries, that exist, or in the future could exist, in various jurisdictions around the world, • restrictive governmental actions (such as restrictions on transfer of funds, restrictions on individuals’ movement, including travel restrictions, quarantines, lockdowns, and curfews, trade protection measures, including export duties, quotas, customs duties, border taxes, border closures, increased import or export controls, export licenses, and tariffs, and restrictions on the purchase of products made or containing technology or components from certain companies or from companies located in certain jurisdictions), or actions by non-governmental individuals and groups (such as protests, boycotts, insurgencies, organized crime, and general civil unrest), that could negatively impact trade between, or increase the cost of operating in, the countries in which we do business, • labor market conditions and laws, • disruptions of capital and trading markets, • difficulty in collecting, or failure to collect, accounts receivable, as well as longer collection periods, • changes in, or non-compliance with, legal or regulatory import/export requirements, including restrictions on selling to certain customers or into certain jurisdictions, • natural disasters and severe weather events, including, but not limited to, earthquakes, wildfires, droughts, hurricanes, tsunamis, rising sea levels, as well as other impacts of climate change, • acts of terrorism, widespread illness or other deterioration of public health conditions, and war, • misappropriation or other unauthorized transfers of our electronic information and breaches of our information systems, as well as the potential lack of adequate remedies or enforcement mechanisms in certain jurisdictions, • difficulty in engaging distribution partners or obtaining sales or other business support in certain jurisdictions, • cultural differences in the conduct of business, • direct or indirect government actions, subsidies, or policies aimed at supporting local industry, • the laws and policies of the United States and other countries affecting trade, foreign investment and loans, foreign travel, and import or export licensing requirements, including, but not limited to, prohibitions on certain trade and other activities in China, Russia, Belarus, and portions of Ukraine, • withdrawal from, or renegotiation of, existing trade agreements by the United States (or other jurisdictions) potentially affecting Mexico, China, and other countries in which we do business, • changes in current or future tax law or regulations or new interpretations thereof, by federal or state agencies or foreign governments, • changes in the effective tax rate as a result of our overall profitability and mix of earnings in countries with differing statutory tax rates, 12 • results of audits and examination of previously filed tax returns, and • limitations on our ability under local laws to protect or enforce our intellectual property rights in a particular foreign jurisdiction.
Our key facilities include, but are not limited to, our semiconductor wafer fabrication facilities in Newbury Park, California, and Woburn, Massachusetts, our SAW, TC-SAW, and BAW filter wafer fabrication facilities in Osaka, Japan, and our assembly and test facilities in Mexicali, Mexico, and in Singapore.
Our key facilities include, but are not limited to, our semiconductor wafer fabrication facilities in Newbury Park, California, and Woburn, Massachusetts, our SAW, TC-SAW, and 15 BAW filter wafer processing facilities in Osaka, Japan, and our assembly and test facilities in Mexicali, Mexico, and in Singapore.
In such instances, we could also incur substantial unanticipated costs or scheduling delays to develop or acquire substitute technology to deliver competitive products. These risks are heightened with respect to certain of our products that incorporate increasing amounts of digital circuit content that is subject to third-party intellectual property rights.
In such instances, we could also incur substantial unanticipated costs or scheduling delays to develop or acquire substitute technology to deliver competitive products. These risks are heightened with respect to certain of our products that incorporate increasing amounts of embedded software and digital circuit content that is subject to third-party intellectual property rights.
Despite our efforts, parties, including current and former employees, consultants, customers, licensees, suppliers, vendors, and other third-party affiliates may attempt to copy, disclose, transfer, misappropriate or obtain access to our information without our authorization.
Despite our efforts, parties, including current and former employees, consultants, customers, licensees, suppliers, vendors, and other third parties may attempt to copy, disclose, transfer, misappropriate or obtain access to our information without our authorization.
The agreements that govern the Term Loan Facility, the Notes, and the Revolver contain various affirmative and negative covenants that, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, change the nature of our business, and/or merge or consolidate with any other person or sell or convey certain assets to any one person.
The agreements that govern the Term Loan Facility, the Notes, and the Revolving Credit Facility contain various affirmative and negative covenants that, subject to certain significant exceptions, restrict our ability to, among other things, have liens on our property, change the nature of our business, and/or merge or consolidate with any other person or sell or convey certain assets to any one person.
In addition, we often incorporate the intellectual property of our customers, suppliers, or other third parties into our designs, and we have obligations with respect to the non-use and non-disclosure of such third-party intellectual property.
In addition, we often incorporate the intellectual property of our customers, suppliers, or other third parties into our designs, and we have obligations with respect to the non-usage and non-disclosure of such third-party intellectual property.
Furthermore, attempts by computer hackers to gain unauthorized access to our systems or information could result in our confidential and/or proprietary information being compromised or our manufacturing and other business operations being interrupted.
Furthermore, attempts by computer hackers or other third parties to gain unauthorized access to our systems or information could result in our confidential and/or proprietary information being compromised or our manufacturing and other business operations being interrupted.
Violations of one or more of these legal regimes’ laws and regulations in the conduct of our business could result in significant fines, penalties, or monetary damages, criminal sanctions against us or our officers, prohibitions on doing business, unfavorable publicity and other reputation damage, restrictions on our ability to process information, and allegations by our clients that we have not performed our contractual obligations.
Violations of one or more of these legal regimes’ laws and regulations in the conduct of our business could result in significant fines, penalties, or monetary damages, criminal sanctions against us or our officers, prohibitions on doing business, unfavorable publicity and other reputational damage, restrictions on our ability to process information, and allegations by our counterparties that we have not performed our contractual obligations.
In each of fiscal 2022, fiscal 2021, and fiscal 2020, one customer accounted for greater than ten percent of our net revenue. For further discussion see Note 15 to Item 8 of this Annual Report on Form 10-K. We rely on Original Equipment Manufacturers (“OEMs”) and Original Design Manufacturers (“ODMs”) to design our products into their end products.
In each of fiscal 2023, fiscal 2022, and fiscal 2021, one customer accounted for greater than ten percent of our net revenue. For further discussion see Note 14 to Item 8 of this Annual Report on Form 10-K. We rely on Original Equipment Manufacturers (“OEMs”) and Original Design Manufacturers (“ODMs”) to design our products into their end products.
Our business would be adversely affected by the departure of existing members of our senior management team or if our senior management team is unable to effectively implement our strategy.
Our business could be adversely affected by the departure of existing members of our senior management team or if our senior management team is unable to effectively implement our strategy.
The degree to which the pandemic continues to impact us will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, and how quickly and to what extent normal economic and operating conditions resume.
The degree to which the pandemic continues to impact us will depend on future developments that are highly uncertain and cannot be predicted, including, but not limited to, the existence of new variants of the virus that causes COVID-19, the duration and spread of the pandemic, its severity, the actions to contain COVID-19 or treat its impact, and how quickly and to what extent normal economic and operating conditions resume.
In particular, the imposition by the United States of tariffs on goods imported from China, or deemed to be of Chinese origin, and other government actions that restrict our ability to sell our products to Chinese customers or to manufacture or source components in China, and countermeasures imposed by China in response, could directly or indirectly adversely impact our manufacturing costs, the availability and cost of materials, and the sales of our products in China and elsewhere.
In particular, the imposition by the United States of tariffs on goods imported from China, or deemed to be of Chinese origin, and other government actions that restrict our ability to sell our products to Chinese customers or to manufacture or source components in China, and countermeasures imposed by China in response, could directly or indirectly adversely impact our manufacturing costs, the availability and cost of materials, including gallium, germanium, and rare earth minerals, and the sales of our products in China and elsewhere.
Although we are currently evaluating the impact this law may have, we do expect our effective tax rate to increase in fiscal year 2024. Because the changes in U.S. tax law require a number of complex calculations that previously were not required, our actual tax liability may differ materially from our income tax provisions, estimates, and accruals.
We are currently evaluating the impact this law may have on our effective tax rate in fiscal year 2024. 13 Because the changes in U.S. tax law require a number of complex calculations that previously were not required, our actual tax liability may differ materially from our income tax provisions, estimates, and accruals.
Any problems that we may encounter with the delivery, quality, or cost of our products could damage our customer relationships and materially and adversely affect our business, results of operations, and financial condition. During fiscal 2022, we entered into long-term capacity reservation and supply agreements with certain third-party foundries.
Any problems that we may encounter with the delivery, quality, or cost of our products could damage our customer relationships and materially and adversely affect our business, results of operations, and financial condition. During fiscal 2022, we entered into long-term capacity reservation and supply agreements with certain third-party foundries, under which we agreed to certain minimum purchase commitments.
Beginning in fiscal year 2023, for U.S. income tax purposes we will be required to capitalize our research and development expenses and amortize them over five or fifteen years, rather than deduct them in the year incurred, which we expect will increase our taxes payable, resulting in reduced cash flows.
Beginning in fiscal year 2023, for U.S. income tax purposes we were required to capitalize our research and development expenses and amortize them over five or fifteen years, rather than deduct them in the year incurred, which has increased, and which we expect will continue to increase, our taxes payable, resulting in reduced near term-cash flows.
Our sales are typically made pursuant to standard purchase orders and/or specified customer contracts for delivery of products and not under long-term supply arrangements with our customers. Our customers may seek to cancel or defer orders before shipment.
We are subject to uncertainties involving the ordering and shipment of, and payment for, our products. 17 Our sales are typically made pursuant to standard purchase orders and/or specified customer contracts for delivery of products and not under long-term supply arrangements with our customers. Our customers may seek to cancel or defer orders before shipment.
This volatility has affected, and could significantly and negatively affect in the future, the market prices of securities of many technology companies, particularly the market price of our common stock.
Public stock markets have experienced price and trading volume volatility. This volatility has affected, and could significantly and negatively affect in the future, the market prices of securities of many technology companies, particularly the market price of our common stock.
Demand from Chinese customers may be adversely affected by China’s evolving laws and regulations, including those relating to taxation, import and export tariffs and restrictions, currency controls, environmental regulations, information security, indigenous innovation, and intellectual property rights and enforcement of those rights.
We are subject to the risks of doing business in China. Demand from Chinese customers may be adversely affected by China’s evolving laws and regulations, including those relating to taxation, import and export tariffs and restrictions, currency controls, environmental regulations, information security, indigenous innovation, and intellectual property rights and enforcement of those rights.
Such laws may be complex, ambiguous, and subject to interpretation, which may create uncertainty regarding compliance. As a result, our efforts to comply with such laws, to the extent applicable, may be expensive and may fail, which could adversely affect our business, results of operations, and cash flows.
As a result, our efforts to comply with such laws, to the extent applicable, may be expensive and may fail, which could adversely affect our business, results of operations, and cash flows.
Our manufacturing partners may not be able to effectively manage the transition, or we may not be able to maintain our relationships with certain manufacturing partners. If our manufacturing partners or we experience significant delays in this transition or fail to efficiently implement this transition, our business, results of operations, and financial condition could be materially and adversely affected.
If our manufacturing partners or we experience significant delays in this transition or fail to efficiently implement this transition, our business, results of operations, and financial condition could be materially and adversely affected.
Accordingly, we believe that to remain competitive, we must continue to reduce the cost of producing and delivering existing products at the same time that we develop and introduce new or enhanced products.
Accordingly, we believe that to remain competitive, we must continue to reduce the cost of producing and delivering existing products at the same time that we develop and introduce new or enhanced products. We may not be able to continue to reduce the cost of producing and delivering our products in a timely manner and thereby remain competitive.
Even after the pandemic has subsided as a public health matter, we may experience material adverse impacts to our business as a result of its adverse impact on the global economy. We are subject to the risks of doing business in China.
Even after the pandemic has subsided as a public health matter, we may experience material adverse impacts to our business operations, results of operations and financial condition as a result of its adverse impact on the global economy.
In addition, the loss of certain members of our senior management team could harm our relationships with key customers, which could negatively impact our future revenue, results of operations, and financial condition. We are subject to uncertainties involving the ordering and shipment of, and payment for, our products.
In addition, the loss of certain members of our senior management team could harm our relationships with key customers, which could negatively impact our future revenue, results of operations, and financial condition.
Furthermore, our entry into capacity commitments in an attempt to ensure sufficient supply of raw materials and components may result in our obligation to pay above-market prices in the event of a future downward price correction.
Furthermore, our entry into capacity commitments in an attempt to ensure sufficient supply of raw materials and components may result in our obligation to pay above-market prices in the event of a future downward price correction. We may not be able to effectively operate our business if we are unable to attract and retain qualified personnel.
We are dependent upon third parties for the supply of raw materials and components. Our manufacturing operations depend on obtaining adequate supplies of raw materials and components used in our manufacturing processes at a competitive cost.
Our manufacturing operations depend on obtaining adequate supplies of raw materials and components used in our manufacturing processes at a competitive cost.
If unfavorable capital market conditions exist in the event we were to seek additional financing, we may not be able to raise sufficient capital on favorable terms and on a timely basis, if at all.
If unfavorable capital market conditions exist in the event we were to seek additional financing, we may not be able to raise sufficient capital on favorable terms and on a timely basis, if at all. Failure to obtain capital when required by our business circumstances would have a material adverse effect on us.
The impacts on our business operations and workforce of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, and the duration of such impacts, are uncertain, constantly evolving, and difficult to quantify, but have thus far included, or in the future may include, the following: • We have experienced, and may continue to experience, disruptions to our supply chain and increased costs in connection with the sourcing of materials, components, equipment, assembly and test services, engineering support, shipping and logistics services, and other services, caused in part by the pandemic.
The pandemic’s impacts on our business operations and workforce, and the duration of such impacts, are uncertain, constantly evolving, and difficult to quantify, but have thus far included, or in the future may include, disruptions to our supply chain and increased costs in connection with the sourcing of materials, components, equipment, assembly and test services, engineering support, shipping and logistics services, and other services.
Our employees are highly sought after by our competitors and other companies, which in some cases may be able to offer compensation opportunities in excess of what we offer.
Our employees are in high demand, and our competitors and other companies may be able to offer compensation opportunities in excess of what we offer.
Future cash dividends and the amount and timing of our stock repurchases may be affected by, among other factors: • our views on potential future capital requirements, including those related to acquisitions as well as research and development, • our ability to generate sufficient earnings and cash flows, • our use of cash to consummate various acquisition transactions, • our repayment of principal and interest on our indebtedness, • capital requirements related to cash dividends and stock repurchase programs, • changes in federal and state income tax laws or corporate laws, and • changes to our business model.
Future cash dividends and the amount and timing of our stock repurchases may be affected by, among other factors: • our views on potential future capital requirements, including those related to research and development, • our ability to generate sufficient earnings and cash flows, • our use of cash to consummate various acquisition transactions, • our repayment of principal and interest on our indebtedness, • changes in federal and state income tax laws or corporate laws, and • changes to our business model. 25 Our cash dividend payments and stock repurchases may change from time to time, and we cannot provide assurance that we will increase our cash dividend payment or declare cash dividends or make stock repurchases in any particular amounts or at all.
Certain provisions in our organizational documents and Delaware law may make it difficult for someone to acquire control of us. We have certain anti-takeover measures that may affect our common stock.
A reduction in our cash dividend payments or a reduction in the level of our stock repurchases could have a negative effect on our stock price. Certain provisions in our organizational documents and Delaware law may make it difficult for someone to acquire control of us. We have certain anti-takeover measures that may affect our common stock.
Our existing indebtedness or incurrence of any additional indebtedness could reduce funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes and may create competitive disadvantages relative to other companies with lower debt levels.
Our existing indebtedness or incurrence of any additional indebtedness could reduce funds available for working capital, capital expenditures, acquisitions, and other general corporate purposes and may create competitive disadvantages relative to other companies with lower debt levels. 18 In addition, our credit ratings, combined with fluctuating interest rates, affect the cost and availability of future borrowings and, accordingly, our cost of capital.
In addition, our commitment to environmentally sustainable practices, while undertaken in a manner designed to be as efficient and cost effective as possible, may result in increases in costs of operations for us relative to our competitors until technologies and methods are developed that will help reduce those costs or such practices become industry best practice.
In addition, our commitment to environmentally sustainable practices, while undertaken in a manner designed to be as efficient and cost effective as possible, may result in increases in costs of operations for us relative to our competitors until technologies and methods are developed that will help reduce those costs or such practices become industry best practice. 21 A number of domestic and foreign jurisdictions restrict or may seek to restrict the use of various substances, including a class of chemicals known as per- and polyfluoroalkyl substances, and a number of such substances have been or are currently used in our products or processes.
Our success depends on our ability to continue to attract, retain, and motivate qualified personnel, including executive officers and other key management, engineering, and technical personnel.
As the source of our technological and product innovations, our key engineering and technical personnel represent a significant asset. Our success depends on our ability to continue to attract, retain, and motivate qualified personnel, including executive officers and other key management, engineering, and technical personnel.
G eopolitical tensions or conflicts, such as the ongoing conflict between Russia and Ukraine and the tensions between China and Taiwan, may create a heightened risk of cybersecurity incidents.
Geopolitical tensions or conflicts, such as the ongoing conflict involving Russia and Ukraine, the conflicts in Israel and other Middle Eastern countries and the tensions involving China and Taiwan, may create a heightened risk of cybersecurity incidents.
Additionally, on May 21, 2021, the Company entered into the Revolving Credit Agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $750 million Revolver. Borrowings under the Revolving Credit Facility could be used for general corporate purposes and working capital needs of the Company and its subsidiaries.
Additionally, on May 21, 2021, the Company entered into a revolving credit agreement with various financial institutions, as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, providing for a $750 million revolving credit facility (the “Revolving Credit Facility”).
There are significant risks associated with reliance on third-party foundries, including: • the lack of wafer supply, potential wafer shortages, and higher wafer prices, • required minimum purchase commitments, • limited ability to respond to unanticipated changes in customer demand, • limited control over delivery schedules, manufacturing yields, production costs, process technologies, and quality assurance, and • the inaccessibility of, or delays in obtaining access to, key process technologies, materials, and IP blocks. 15 Even in cases where we have long-term supply arrangements to obtain additional external manufacturing capacity, the third-party foundries we use for our standby manufacturing capacity may allocate their limited capacity to the production requirements of other customers and in general we have no contractual right to prevent them from making such allocations.
There are significant risks associated with reliance on third-party foundries, including: • the lack of wafer supply, potential wafer shortages, and higher wafer prices, • required minimum purchase commitments, • limited ability to respond to unanticipated changes in customer demand, • limited control over delivery schedules, manufacturing yields, production costs, process technologies, and quality assurance, and • the inaccessibility of, or delays in obtaining access to, key process technologies, materials, and IP blocks.
The amount of expense and capital expenditures that might be required to satisfy environmental liabilities, to complete remedial actions, and to continue to comply with applicable environmental laws may have a material adverse effect on our business, results of operations, and financial condition. 21 In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”) matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on ESG topics such as climate change, carbon emissions, water usage, waste management, human capital, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
In addition, increasing governmental, investor, and societal attention on environmental, social, and governance (“ESG”) matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on ESG topics such as climate change, carbon emissions, water usage, waste management, human capital, forced labor, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Due in part to our repayment obligations on our outstanding indebtedness, the capital required to fund these investments may not be available in the future. Risks Related to Acquisitions We incurred significant indebtedness in connection with the acquisition of the Infrastructure and Automotive business of Silicon Labs, which could reduce our flexibility to operate our business.
Risks Related to Acquisitions We incurred significant indebtedness in connection with the acquisition of the Infrastructure and Automotive business of Silicon Labs, which could reduce our flexibility to operate our business.
This transition often requires us to upgrade our capital equipment, modify the manufacturing processes for our products, design new products to more stringent standards, and redesign some existing products. We have experienced some difficulties migrating to smaller geometry process technologies or new manufacturing processes, which resulted in sub-optimal manufacturing yields, delays in product deliveries, and increased expenses.
We have experienced some difficulties migrating to smaller geometry process technologies or new manufacturing processes, which resulted in sub-optimal manufacturing yields, delays in product deliveries, and increased expenses. We may face similar difficulties, delays, and expenses as we continue to transition our products to smaller geometry processes in the future.
There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future. An inability to obtain or maintain a rating could increase the cost of future borrowings or refinancings of our indebtedness, limit our access to sources of financing in the future, or lead to other potentially adverse consequences.
An inability to obtain or maintain a rating could increase the cost of future borrowings or refinancings of our indebtedness, limit our access to sources of financing in the future, or lead to other potentially adverse consequences. The agreements that govern our indebtedness contain various covenants that impose restrictions that may affect our ability to operate our businesses.
The effects of the global COVID-19 pandemic continue to adversely affect our business operations. The global COVID-19 pandemic—including the public health crisis, the measures taken by governments, businesses, and individuals in an effort to limit COVID-19’s spread, and the resulting global supply chain challenges—has adversely affected, and continues to adversely affect, our business operations.
The effects of the COVID-19 pandemic may adversely affect our business operations, results of operations and financial condition. The global COVID-19 pandemic—including the measures taken to limit the spread of the virus and its variants, and the resulting global supply chain challenges—has adversely affected, and may continue to adversely affect, our business operations.
We may face similar difficulties, delays, and expenses as we continue to transition our products to smaller geometry processes in the future. In some instances, we depend on our relationships with our third-party foundries and packaging subcontractors to transition to smaller geometry processes successfully.
In some instances, we depend on our relationships with our third-party foundries and packaging subcontractors to transition to smaller geometry processes successfully. Our manufacturing partners may not be able to effectively manage the transition, or we may not be able to maintain our relationships with certain manufacturing partners.
This indebtedness could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. We also have incurred, and will continue to incur, various costs and expenses associated with our indebtedness.
We also have incurred, and will continue to incur, various costs and expenses associated with our indebtedness.
While we maintain insurance coverage to mitigate some of these risks, such coverage may be insufficient to cover all losses or all types of claims that may arise. Further, China has implemented, and other countries or regions may implement, cybersecurity laws that require companies’ overall information technology security environment to meet certain standards and/or be certified.
While we maintain insurance coverage to mitigate some of these risks, such coverage may be insufficient to cover all losses or all types of claims that may arise.
Failure to obtain capital when required by our business circumstances would have a material adverse effect on us. 17 In addition, the future growth of our business is likely to require the expansion of our manufacturing facilities, the upgrade of our manufacturing equipment, strategic investments, and/or corporate acquisitions.
In addition, the future growth of our business is likely to require the expansion of our manufacturing facilities, the upgrade of our manufacturing equipment, strategic investments, and/or corporate acquisitions. Due in part to our repayment obligations on our outstanding indebtedness, the capital required to fund these investments may not be available in the future.
In addition, our credit ratings, combined with fluctuating interest rates, affect the cost and availability of future borrowings and, accordingly, our cost of capital. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations.
Our ratings reflect each rating organization’s opinion of our financial strength, operating performance, and ability to meet our debt obligations. There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future.
These agreements may cease to be commercially reasonable if overall market demand or pricing is reduced, and they may have an adverse effect on our operating results in the event our future supply needs are reduced below the minimum order commitments.
These long-term capacity reservation agreements may have an additional adverse effect on our operating results in the event our future supply needs are reduced below the minimum purchase commitments as a result of further reduction in overall market demand. 16 We are dependent upon third parties for the supply of raw materials and components.
We may experience negative impacts to our business operations if one or more of these major customers were to significantly decrease its orders for our products due to disruptions to its business operations or other pandemic-related issues. 12 These effects, alone or taken together, could have a material adverse effect on our business, results of operations, customer and supplier relations, employee relations, cash flows, and financial condition.
Our business operations would also be negatively impacted if one or more of our major customers were to significantly decrease its orders for our products due to disruptions to its business operations or other pandemic-related issues.
We may not be able to continue to reduce the cost of producing and delivering our products in a timely manner and thereby remain competitive. 20 In order to remain competitive, we expect to continue to transition many of our products to increasingly smaller geometries and form factors.
In order to remain competitive, we expect to continue to transition many of our products to increasingly smaller geometries and form factors. This transition often requires us to upgrade our capital equipment, modify the manufacturing processes for our products, design new products to more stringent standards, and redesign some existing products.
Removed
To the extent we are unable to pass these costs on to our customers, we experience reduced profitability. Given that our customers and suppliers are facing similar supply chain challenges, we expect continued difficulty in forecasting demand and supply needs for the foreseeable future.
Added
Even in cases where we have long-term supply arrangements to obtain additional external manufacturing capacity, the third-party foundries we use for our standby manufacturing capacity may allocate their limited capacity to the production requirements of other customers and in general we have no contractual right to prevent them from making such allocations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth our principal facilities: Location Owned/Leased Square Footage Primary Function Singapore, Singapore Leased 405,700 Filter manufacturing Osaka, Japan Owned (1) 383,600 Filter manufacturing Mexicali, Mexico Leased 380,900 Manufacturing and office space Mexicali, Mexico Owned 380,000 Manufacturing and office space Irvine, California Leased 218,000 Design center and office space Woburn, Massachusetts Owned 158,000 Manufacturing and office space Kadoma, Japan Leased 123,100 Filter manufacturing and office space (2) Adamstown, Maryland Owned 121,200 Manufacturing and office space Newbury Park, California Owned 111,600 Manufacturing and office space Newbury Park, California Leased 110,000 Design center Austin, Texas Leased 98,313 Design center and office space (1) The Company owns the building and the land is leased for approximately 40 years expiring in 2061.
Biggest changeThe following table sets forth our principal facilities: Location Owned/Leased Square Footage Primary Function Singapore, Singapore Leased 405,700 Filter manufacturing Osaka, Japan Owned (1) 383,600 Filter manufacturing Mexicali, Mexico Leased 380,900 Manufacturing and office space Mexicali, Mexico Owned 380,000 Manufacturing and office space Irvine, California Leased 218,000 Design center and office space Woburn, Massachusetts Owned 158,000 Manufacturing and office space Newbury Park, California Owned 111,600 Manufacturing and office space Newbury Park, California Leased 110,000 Design center Austin, Texas Leased 98,313 Design center and office space (1) The Company owns the building and the land is leased for approximately 39 years expiring in 2061.
ITEM 2. PROPERTIES. We maintain our primary executive offices in Irvine, California. For information regarding property, plant, and equipment by geographic region for each of the last three fiscal years, see Note 15 to Item 8 of this Annual Report on Form 10-K.
ITEM 2. PROPERTIES. We maintain our primary executive offices in Irvine, California. For information regarding property, plant, and equipment by geographic region for each of the last two fiscal years, see Note 14 to Item 8 of this Annual Report on Form 10-K.
Removed
(2) The Company has transitioned all filter manufacturing operations from Kadoma, Japan to Osaka, Japan as of September 30, 2022.

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 12 of Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable. PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS. The information set forth under Note 11 of Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFuture cash dividends may be affected by, among other items, our views on potential future capital requirements, including those relating to research and development, creation and expansion of investments and acquisitions, stock repurchase programs, debt issuances and repayments, changes in federal and state income tax law, and changes to our business model. 26 Issuer Purchases of Equity Securities The following table provides information regarding repurchases of common stock made during the three months ended September 30, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) 07/02/22 - 07/29/22 336,495 (2) $96.39 317,196 $1.2 billion 07/30/22 - 08/26/22 292,157 (3) $107.34 280,855 $1.1 billion 08/27/22 - 09/30/22 200,000 (4) $99.31 200,000 $1.1 billion 828,652 798,051 _________________________ (1) We announced on January 28, 2021 that our Board of Directors had approved a stock repurchase program on January 26, 2021, which authorizes the repurchase of up to $2.0 billion of our common stock from time to time on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements, and which is scheduled to expire on January 26, 2023.
Biggest changeFuture cash dividends may be affected by, among other items, our views on potential future capital requirements, including those relating to research and development, creation and expansion of investments and acquisitions, stock repurchase programs, debt issuances and repayments, changes in federal and state income tax law, and changes to our business model. 27 Issuer Purchases of Equity Securities The following table provides information regarding repurchases of common stock made during the three months ended September 29, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) 7/1/23 - 7/28/23 12,567 (2) $112.71 — $2.0 billion 7/29/23 - 8/25/23 8,549 (2) $105.62 — $2.0 billion 8/26/23 - 9/29/23 — $0.00 — $2.0 billion 21,116 — _________________________ (1) We announced on February 6, 2023 that our Board of Directors had approved a stock repurchase program on January 31, 2023, which authorizes the repurchase of up to $2.0 billion of our common stock from time to time on the open market or in privately negotiated transactions, in compliance with applicable securities laws and other legal requirements, and which is scheduled to expire on February 1, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information and Dividends Our common stock is traded on the Nasdaq Global Select Market under the symbol “SWKS”. The number of stockholders of record of our common stock as of November 3, 2022, was 8,679.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information and Dividends Our common stock is traded on the Nasdaq Global Select Market under the symbol “SWKS”. The number of stockholders of record of our common stock as of November 2, 2023, was 8,175.
On November 3, 2022, the Company announced that the Board of Directors had declared a cash dividend of $0.62 per share of common stock, payable on December 13, 2022, to stockholders of record as of November 22, 2022.
On November 2, 2023, the Company announced that the Board of Directors had declared a cash dividend of $0.68 per share of common stock, payable on December 12, 2023, to stockholders of record as of November 21, 2023.
(2) 317,196 shares were repurchased at an average price of $96.01 per share as part of our stock repurchase program, and 19,299 shares were repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements with an average price of $102.96 per share.
(2) Represents shares repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements. 28 ITEM 6. [RESERVED] 29
Removed
(3) 280,855 shares were repurchased at an average price of $106.88 per share as part of our stock repurchase program, and 11,302 shares were repurchased by us at the fair market value of the common stock as of the applicable purchase date, in connection with the satisfaction of tax withholding obligations under equity award agreements with an average price of $111.39 per share.
Removed
(4) Represents shares repurchased by us as a part of our stock repurchase program. 27 ITEM 6. [RESERVED] 28

Item 7. Management's Discussion & Analysis

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

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Biggest changeFiscal Years Ended September 30, 2022 October 1, 2021 October 2, 2020 Net revenue 100.0 % 100.0 % 100.0 % Cost of goods sold 52.5 50.8 51.9 Gross profit 47.5 49.2 48.1 Operating expenses: Research and development 11.3 10.3 13.7 Selling, general, and administrative 6.0 6.3 6.9 Amortization of intangibles 1.8 0.7 0.4 Restructuring, impairment, and other charges 0.6 0.2 0.4 Total operating expenses 19.7 17.6 21.5 Operating income 27.8 31.6 26.6 Interest expense (0.9) (0.3) — Income before income taxes 26.9 31.3 26.6 Provision for income taxes 3.7 2.0 2.3 Net income 23.2 % 29.3 % 24.3 % 29 General During the fiscal year ended September 30, 2022, the following key factors contributed to our overall results of operations, financial position, and cash flows: • Net revenue increased 7.4% to $5,485.5 million in fiscal 2022, as compared to $5,109.1 million in fiscal 2021.
Biggest changeFiscal Years Ended September 29, 2023 September 30, 2022 October 1, 2021 Net revenue 100.0 % 100.0 % 100.0 % Cost of goods sold 55.8 52.5 50.8 Gross profit 44.2 47.5 49.2 Operating expenses: Research and development 12.7 11.3 10.3 Selling, general, and administrative 6.6 6.0 6.3 Amortization of intangibles 0.7 1.8 0.7 Restructuring, impairment, and other charges 0.6 0.6 0.2 Total operating expenses 20.6 19.7 17.6 Operating income 23.6 27.8 31.6 Interest expense (1.3) (0.9) (0.3) Other income (expense), net 0.4 — — Income before income taxes 22.6 26.9 31.3 Provision for income taxes 2.0 3.7 2.0 Net income 20.6 % 23.2 % 29.3 % 30 General During the fiscal year ended September 29, 2023, the following key factors contributed to our overall results of operations, financial position, and cash flows: • Net revenue decreased 13.0% to $4,772.4 million in fiscal 2023, as compared to $5,485.5 million in fiscal 2022, driven primarily by a decrease in demand for our mobile products from smartphone customers in the Android ecosystem and for our connectivity solutions in consumer and enterprise markets. • Our ending cash, cash equivalents, and marketable securities balance increased 26% to $738.5 million in fiscal 2023, as compared to $586.8 million in fiscal 2022.
However, we cannot be certain that our cash on hand, cash generated from operations, and funds from our Revolver will be available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional cash and capital resources.
However, we cannot be certain that our cash on hand, cash generated from operations, and funds from our Revolver will be available in the future to fund all of our capital and operating requirements. In addition, any future strategic investments and significant acquisitions may require additional 34 cash and capital resources.
Based on this definition, our most critical accounting policies include revenue recognition, which impacts the recording of net revenue; inventory valuation, which impacts the cost of goods sold and gross margin; and income taxes, which impacts the income tax provision. These policies and significant judgments involved are discussed further below.
Based on this definition, our most critical accounting estimates include revenue recognition, which impacts the recording of net revenue; inventory valuation, which impacts the cost of goods sold and gross margin; and income taxes, which impacts the income tax provision. These policies and significant judgments involved are discussed further below.
The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and which require our most difficult, complex, or subjective judgments or estimates.
The SEC has defined critical accounting estimates as those that are both most important to the portrayal of our financial condition and results and which require our most difficult, complex, or subjective judgments or estimates.
For information regarding net revenue by geographic region and customer concentration, see Note 15 to Item 8 of this Annual Report on Form 10-K.
For information regarding net revenue by geographic region and customer concentration, see Note 14 to Item 8 of this Annual Report on Form 10-K.
If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected. 33 Our invested cash balances primarily consist of highly liquid marketable securities that are available to meet near-term cash requirements including: term deposits, certificates of deposit, money market funds, U.S.
If we are unable to obtain sufficient cash or capital to meet our needs on a timely basis and on favorable terms, our business and operations could be materially and adversely affected. Our invested cash balances primarily consist of highly liquid marketable securities that are available to meet near-term cash requirements including: money market funds, U.S.
We have a Revolving Credit Agreement (the “Revolving Credit Agreement”) under which we may borrow up to $750.0 million for general corporate purposes and working capital needs of the Company and its subsidiaries. As of September 30, 2022, there were no borrowings outstanding under the revolving credit facility (the “Revolver”). The Revolving Credit Agreement expires July 26, 2026.
We have a Revolving Credit Agreement (the “Revolving Credit Agreement”) under which we may borrow up to $750.0 million for general corporate purposes and working capital needs of the Company and its subsidiaries. As of September 29, 2023, there were no borrowings outstanding under the revolving credit facility (the “Revolver”). The Revolving Credit Agreement expires July 26, 2026.
Cash provided by (used in) financing activities: Cash used in financing activities consists primarily of proceeds and payments related to our long-term borrowings and cash transactions related to equity.
Cash used in financing activities: Cash used in financing activities consists primarily of proceeds and payments related to our long-term borrowings and cash transactions related to equity.
Selling, General, and Administrative Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Selling, general, and administrative $ 329.8 2.3% $ 322.5 39.4% $ 231.4 % of net revenue 6.0 % 6.3 % 6.9 % Selling, general, and administrative expenses include legal and related costs, accounting, treasury, human resources, information systems, customer service, bad debt expense, sales commissions, share-based compensation expense, advertising, marketing, costs associated with business combinations completed or contemplated during the period, and other costs.
Selling, General, and Administrative Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Selling, general, and administrative $ 314.0 (4.8)% $ 329.8 2.3% $ 322.5 % of net revenue 6.6 % 6.0 % 6.3 % Selling, general, and administrative expenses include legal and related costs, accounting, treasury, human resources, information systems, customer service, bad debt expense, sales commissions, share-based compensation expense, advertising, marketing, costs associated with business combinations completed or contemplated during the period, and other costs.
The duration, severity, and future impact of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, continue to be highly uncertain and could still result in significant disruptions to our business operations, as well as negative impacts to our financial condition.
Impact of COVID-19 The COVID-19 pandemic has affected business conditions in our industry. The duration, severity, and future impact of the pandemic, including as a result of more contagious variants of the virus that causes COVID-19, continue to be uncertain and could still result in significant disruptions to our business operations, as well as negative impacts to our financial condition.
On July 26, 2021, the Company borrowed $1.0 billion in aggregate principal amount of term loans (the “Term Loans”) under the Term Loan Facility to finance a portion of the purchase price for the Acquisition and to pay fees and expenses incurred in connection therewith.
On July 26, 2021, the Company borrowed $1.0 billion in aggregate principal amount of term loans (the “Term Loans”) under the Term Loan Facility to finance a portion of the purchase price for the acquisition of the Infrastructure and Automotive business of Silicon Laboratories Inc. and to pay fees and expenses incurred in connection therewith.
Treasury securities, agency securities, corporate debt securities, and commercial paper. CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”).
Treasury securities, municipal bonds, and agency securities. CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”).
For a description of contractual obligations, such as taxes, leases, and debt, see Note 9, Note 11, and Note 17 to Item 8 of this Annual Report on Form 10-K, respectively.
For a description of contractual obligations, such as taxes, leases, purchase commitments, and debt, see Note 8, Note 10, Note 11, and Note 16 to Item 8 of this Annual Report on Form 10-K, respectively.
LIQUIDITY AND CAPITAL RESOURCES Set forth below is a summary of our cash flows for the periods indicated: 32 Fiscal Years Ended (in millions) September 30, 2022 October 1, 2021 October 2, 2020 Cash and cash equivalents at beginning of period $ 882.9 $ 566.7 $ 851.3 Net cash provided by operating activities 1,424.6 1,772.0 1,204.5 Net cash used in investing activities (378.9) (3,133.2) (581.4) Net cash provided by (used in) financing activities (1,362.6) 1,677.4 (907.7) Cash and cash equivalents at end of period $ 566.0 $ 882.9 $ 566.7 Cash provided by operating activities: Cash provided by operating activities consists of net income for the period adjusted for certain non-cash items and changes in certain operating assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES Set forth below is a summary of our cash flows for the periods indicated: 33 Fiscal Years Ended (in millions) September 29, 2023 September 30, 2022 October 1, 2021 Cash and cash equivalents at beginning of period $ 566.0 $ 882.9 $ 566.7 Net cash provided by operating activities 1,856.4 1,424.6 1,772.0 Net cash used in investing activities (224.4) (378.9) (3,133.2) Net cash (used in) provided by financing activities (1,479.2) (1,362.6) 1,677.4 Cash and cash equivalents at end of period $ 718.8 $ 566.0 $ 882.9 Cash provided by operating activities: Cash provided by operating activities consists of net income for the period adjusted for certain non-cash items and changes in certain operating assets and liabilities.
Net Revenue Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Net revenue $ 5,485.5 7.4% $ 5,109.1 52.3% $ 3,355.7 We market and sell our products directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers, and indirectly through electronic components distributors.
Net Revenue Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Net revenue $ 4,772.4 (13.0)% $ 5,485.5 7.4% $ 5,109.1 We market and sell our products directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers, and indirectly through electronic components distributors.
See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended October 1, 2021, filed with the SEC on November 24, 2021, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on January 28, 2022 (the “2021 10-K”), for Management’s Discussions and Analysis of Financial Condition and Results of Operations for the fiscal year ended October 2, 2020.
See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, filed with the SEC on November 23, 2022, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on January 27, 2023 (the “2022 10-K”), for Management’s Discussions and Analysis of Financial Condition and Results of Operations for the fiscal year ended October 1, 2021.
During fiscal 2022 and 2021, the Company repaid $50.0 million and $250.0 million of outstanding borrowings under the Term Loans, respectively. As of September 30, 2022, there were $700.0 million of borrowings outstanding under the Term Credit Agreement.
During fiscal 2023, 2022, and 2021, we repaid $400.0 million, $50.0 million, and $250.0 million, of outstanding borrowings under the Term Loans, respectively. As of September 29, 2023, there were $300.0 million of borrowings outstanding under the Term Credit Agreement.
Gross Profit Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Gross profit $ 2,604.3 3.7% $ 2,512.4 55.8% $ 1,612.9 % of net revenue 47.5 % 49.2 % 48.1 % Gross profit represents net revenue less cost of goods sold.
Gross Profit Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Gross profit $ 2,107.3 (19.1)% $ 2,604.3 3.7% $ 2,512.4 % of net revenue 44.2 % 47.5 % 49.2 % Gross profit represents net revenue less cost of goods sold.
Our cost of goods sold consists primarily of purchased materials, labor, and overhead (including depreciation, share-based compensation, and amortization of acquisition intangibles, including inventory step-up expense) associated with product manufacturing.
Our cost of goods sold consists primarily of purchased materials, labor, and overhead (including depreciation, share-based compensation, and amortization of acquisition intangibles, including inventory step-up expense) associated with product manufacturing. Erosion of average selling prices of established products is typical of the semiconductor industry.
Liquidity: Cash, cash equivalents, and marketable securities totaled $586.8 million as of September 30, 2022, representing a decrease of $440.3 million from October 1, 2021. We have outstanding $500.0 million of Notes Due 2023, $500.0 million of Notes Due 2026, and $500.0 million of Notes Due 2031 (the “Notes”).
Liquidity: Cash, cash equivalents, and marketable securities totaled $738.5 million as of September 29, 2023, representing an increase of $151.7 million from September 30, 2022. We have outstanding $500.0 million of Notes Due 2026 and $500.0 million of Notes Due 2031 (the “Notes”).
The $3,040.0 million decrease in cash provided by financing activities for fiscal 2022, as compared to fiscal 2021, was primarily related to a decrease of $2,488.2 million in cash provided by long-term borrowings, an increase of $691.2 million in stock repurchase activity, a decrease of $200.0 million in repayments of Term Loans (as defined below), an increase of $33.3 million related to the minimum statutory payroll tax withholdings upon vesting of employee performance and restricted stock awards, and an increase of $32.5 million in dividend payments.
The $116.6 million increase in cash used in financing activities for fiscal 2023, as compared to fiscal 2022, was primarily related to an increase of $850.0 million for the repayment of debt, an increase of $32.1 million in dividend payments, partially offset by a decrease of $711.5 million in stock repurchase activity, and a decrease of $52.6 million related to the minimum statutory payroll tax withholdings upon vesting of employee performance and restricted stock awards.
The following table sets forth the results of our operations expressed as a percentage of net revenue.
RESULTS OF OPERATIONS Fiscal Years Ended September 29, 2023, September 30, 2022, and October 1, 2021. The following table sets forth the results of our operations expressed as a percentage of net revenue.
The increase in income tax expense in fiscal 2022, as compared to fiscal 2021, was primarily due to a prior period decrease in the reserve for uncertain tax positions, partially offset by a decrease in income from operations and an increase in windfall tax deductions in the current period.
The decrease in income tax expense for fiscal 2023, as compared with the corresponding period in fiscal 2022, was primarily due to lower income from operations, a decrease in tax on global intangible low-taxed income (“GILTI”), an increase in the benefit from foreign-derived intangible income deduction (“FDII”), partially offset by a current period shortfall in tax deductions for share-based compensation, compared to windfall deductions in the prior year.
Research and Development Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Research and development $ 617.9 16.1% $ 532.3 14.7% $ 464.1 % of net revenue 11.3 % 10.4 % 13.8 % Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation and testing of new devices, non-production masks, engineering prototypes, and design tool costs.
The decrease in gross profit in fiscal 2023, as compared to fiscal 2022, was primarily the result of lower unit volumes, impairment charges on long-term supply capacity deposits, and lower average selling prices with a gross profit impact of $572.0 million, $47.5 million, and $41.8 million, respectively, partially offset by a favorable product mix with a gross profit impact of $261.2 million. 31 Research and Development Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Research and development $ 606.8 (1.8)% $ 617.9 16.1% $ 532.3 % of net revenue 12.7 % 11.3 % 10.4 % Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation and testing of new devices, non-production masks, engineering prototypes, and design tool costs.
The decrease in cash, cash equivalents, and marketable securities during fiscal 2022 was primarily due to the repurchase of 6.5 million shares of common stock for $886.8 million, capital expenditures of $489.4 million, and dividend payments of $373.1 million, partially offset by cash generated from operations of $1,424.6 million.
The increase in cash, cash equivalents, and marketable securities during fiscal 2023 was primarily due to cash generated from operations of $1,856.4 million, partially offset by repayments of debt of $900.0 million, dividend payments of $405.2 million, and capital expenditures of $210.3 million.
The increase in selling, general, and administrative expenses in fiscal 2022, as compared to fiscal 2021, was primarily related to increases in headcount-related expenses, partially offset by a decrease in acquisition costs each as a result of the Acquisition in the fourth quarter of fiscal 2021.
The decrease in selling, general, and administrative expenses in fiscal 2023, as compared to fiscal 2022, was primarily related to a decrease in headcount-related expenses, including share-based compensation.
The $347.4 million decrease in cash provided by operating activities for fiscal 2022, as compared to fiscal 2021, was primarily related to unfavorable changes in working capital of $523.7 million, due primarily to increases in inventory and cash with deposits with suppliers.
The $431.8 million increase in cash provided by operating activities for fiscal 2023, as compared to fiscal 2022, was primarily related to favorable changes in working capital of $988.5 million, due primarily to a decrease in accounts receivable and inventory, partially offset by lower net income.
Interest Expense Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Interest expense $ 47.9 257.5% $ 13.4 100.0% $ — % of net revenue 0.9 % 0.3 % — % The increase in interest expense for fiscal 2022, as compared to fiscal 2021, was due to the issuance of the Notes (as defined below) in May 2021 and the borrowing of the Term Loans (as defined below) in July 2021.
Other Income (Expense), net Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Other income (expense), net $ 18.2 828.0% $ (2.5) 316.7% $ (0.6) % of net revenue 0.4 % — % — % The increase in other income for fiscal 2023, as compared to fiscal 2022, was due to an increase in interest income as a result of higher interest rates.
Amortization of Intangibles Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Amortization of intangibles $ 98.9 174.7% $ 36.0 205.1% $ 11.8 % of net revenue 1.8 % 0.7 % 0.4 % The increase in amortization expense for fiscal 2022, as compared to fiscal 2021, was primarily due to the intangible assets acquired during the fourth quarter of fiscal 2021 as part of the Acquisition. 31 Restructuring, Impairment, and Other Charges Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Restructuring, impairment, and other charges $ 30.7 244.9% 8.9 (35.5)% 13.8 % of net revenue 0.6 % 0.2 % 0.4 % Restructuring, impairment, and other charges incurred in fiscal 2022 were primarily related to the abandonment of previously capitalized in-process research and development (“IPR&D”) projects.
Amortization of Intangibles Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Amortization of intangibles $ 33.2 (66.4)% $ 98.9 174.7% $ 36.0 % of net revenue 0.7 % 1.8 % 0.7 % The decrease in amortization expense for fiscal 2023, as compared to fiscal 2022, was primarily due to certain intangible assets that were acquired in prior fiscal years reaching the end of their useful lives.
See Note 9 to Item 8 of this Annual Report on Form 10-K for additional information regarding income taxes.
We are currently evaluating the impact this law may have on our effective tax rate. CAMT is effective for the Company in fiscal year 2024. See Note 8 to Item 8 of this Annual Report on Form 10-K for additional information regarding income taxes.
The increase in research and development expense in fiscal 2022, as compared to fiscal 2021, was primarily related to headcount-related expenses, including share-based compensation, as a result of our increased investment in developing new technologies and products. The increase in headcount was partially due to the Acquisition in the fourth quarter of fiscal 2021.
The decrease in research and development expense in fiscal 2023, as compared to fiscal 2022, was primarily related to a decrease in headcount-related expenses.
As part of our normal course of business, we intend to improve gross profit with efforts to increase unit volumes, improve manufacturing efficiencies, lower manufacturing costs of existing products, and by introducing new and higher value-added products. 30 The increase in gross profit in fiscal 2022, as compared to fiscal 2021, was primarily the result of a favorable product mix, including volume increases for new product introductions, with a gross profit impact of $453.8 million, partially offset by lower comparable unit volumes and an increase in amortization of acquisition intangibles, including inventory step-up due to additional intangible assets acquired as part of the Acquisition during the fourth quarter of fiscal 2021.
As part of our normal course of business, we intend to improve gross profit with efforts to increase unit volumes, reduce material costs, improve manufacturing efficiencies, lower manufacturing costs of existing products, and by introducing new and higher value-added products.
The $2,754.3 million decrease in cash used in investing activities for fiscal 2022, as compared to fiscal 2021, was primarily related to a $2,751.0 million decrease in cash payments made for the fiscal 2021 acquisitions.
The $154.5 million decrease in cash used in investing activities for fiscal 2023, as compared to fiscal 2022, was primarily related to a decrease of $279.1 million in cash used for capital expenditures, partially offset by a decrease of $117.9 million in the net sale of marketable securities.
The increase in net revenue was also driven in part by an increase in demand for next-generation wireless connectivity products, including 5G and advanced Wi-Fi solutions, from major OEMs and the associated increases in average content per device for these products, offset by a decrease in demand for our mobile products from smartphone customers in China.
The decrease in net revenue in fiscal 2023, as compared to fiscal 2022, was driven primarily by a decrease in demand for our mobile products from smartphone customers in the Android ecosystem and for our connectivity solutions in consumer and enterprise markets.
Removed
Impact of COVID-19 The COVID-19 pandemic and the resulting economic downturn are affecting business conditions in our industry.
Added
Consistent with trends in the industry, we anticipate that average selling prices for our established products will continue to decline over time.
Removed
Like many companies in the semiconductor industry, we are experiencing various supply constraints due to the pandemic. While we are working with our global supply chain partners to mitigate this risk, the duration and extent of the supply chain disruptions remain uncertain. RESULTS OF OPERATIONS Fiscal Years Ended September 30, 2022, October 1, 2021, and October 2, 2020.
Added
Restructuring, Impairment, and Other Charges Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Restructuring, impairment, and other charges $ 28.3 (7.8)% $ 30.7 244.9% $ 8.9 % of net revenue 0.6 % 0.6 % 0.2 % Restructuring, impairment, and other charges incurred in fiscal 2023 were primarily due to employee severance costs and impairment charges on divested assets.
Removed
This increase in revenue was driven primarily by our acquisition in the fourth quarter of fiscal 2021 of the Infrastructure and Automotive business of Silicon Laboratories Inc. (the “Acquisition”) to support high-growth market segments, such as automotive including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication and data center, and smart home.
Added
Restructuring, impairment, and other charges incurred in fiscal 2022 were primarily related to the abandonment of previously capitalized in-process research and development projects. 32 Interest Expense Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Interest expense $ 64.4 34.4% $ 47.9 100.0% $ 13.4 % of net revenue 1.3 % 0.9 % 0.3 % The increase in interest expense for fiscal 2023, as compared to fiscal 2022, was due to an increase in the variable interest rate associated with the borrowing on the Term Loans, partially offset by a lower average balance of debt outstanding.
Removed
The increase in net revenue was also driven in part by an increase in demand for next-generation wireless connectivity products, including for 5G and advanced Wi-Fi solutions, from major OEMs and the associated increases in average content per device for these products, offset by a decrease in demand for our mobile products from smartphone customers in China. • Our ending cash, cash equivalents, and marketable securities balance decreased 43% to $586.8 million in fiscal 2022, as compared to $1,027.2 million in fiscal 2021.
Added
Provision for Income Taxes Fiscal Years Ended September 29, 2023 Change September 30, 2022 Change October 1, 2021 (dollars in millions) Provision for income taxes $ 96.0 (52.3)% $ 201.4 100.6% $ 100.4 % of net revenue 2.0 % 3.7 % 2.0 % We recorded a provision for income taxes of $96.0 million (which consisted of $62.0 million and $34.0 million related to United States and foreign income taxes, respectively) and $201.4 million (which consisted of $132.8 million and $68.6 million related to United States and foreign income taxes, respectively) for fiscal 2023 and fiscal 2022, respectively.
Removed
The increase in net revenue in fiscal 2022, as compared to fiscal 2021, was driven primarily by the Acquisition in the fourth quarter of fiscal 2021 to support high-growth market segments, such as automotive including electric and hybrid vehicles, industrial and motor control, power supply, 5G wireless infrastructure, optical data communication and data center, and smart home.
Added
In August 2022, the U.S. government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income exceeding $1.0 billion, as well as a 1% excise tax on corporate stock repurchases made after December 31, 2022.
Removed
Restructuring, impairment, and other charges incurred in fiscal 2021 were primarily related to an impairment on property, plant, and equipment.
Removed
Provision for Income Taxes Fiscal Years Ended September 30, 2022 Change October 1, 2021 Change October 2, 2020 (dollars in millions) Provision for income taxes $ 201.4 100.6% $ 100.4 30.6% $ 76.9 % of net revenue 3.7 % 2.0 % 2.3 % The annual effective tax rate for fiscal 2022 of 13.6% was less than the United States federal statutory rate of 21.0% resulting primarily from foreign earnings taxed at rates lower than the federal statutory rate, a benefit from foreign-derived intangible income deduction (“FDII”), windfall tax deductions, research and development credits, and foreign tax credits, partially offset by a tax on global intangible low-taxed income (“GILTI”) and an increase in the reserves for uncertain tax positions.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−1 removed6 unchanged
Biggest changeTreasury and government securities, corporate bonds and notes, and municipal bonds) that total approximately $20.3 million and $0.5 million within short-term and long-term marketable securities, respectively, as of September 30, 2022. 34 The main objectives of our investment activities are liquidity and preservation of capital.
Biggest changeTreasury and government securities, and municipal bonds) that total approximately $15.6 million and $4.1 million within short-term and long-term marketable securities, respectively, as of September 29, 2023. 35 The main objectives of our investment activities are liquidity and preservation of capital. Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk.
Increases in the value of the United States dollar relative to other currencies could make our products more expensive, which could negatively impact our ability to compete. Conversely, decreases in the value of the United States dollar relative to other currencies could result in our suppliers raising their prices to continue doing business with us.
Increases in the value of the United States dollar relative to other currencies could make our products more expensive, which could negatively impact our ability to compete in international markets. Conversely, decreases in the value of the United States dollar relative to other currencies could result in our suppliers raising their prices to continue doing business with us.
Based on our results of operations for the fiscal year ended September 30, 2022, a hypothetical reduction in the interest rates on our cash, cash equivalents, and other investments to zero would result in an immaterial reduction of interest income with a de minimis impact on income before taxes.
Based on our results of operations for the fiscal year ended September 29, 2023, a hypothetical reduction in the interest rates on our cash, cash equivalents, and other investments to zero would result in an immaterial reduction of interest income with a de minimis impact on income before taxes.
Our investment portfolio consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that total approximately $566.0 million, and marketable securities (U.S.
Our investment portfolio consists of cash and cash equivalents (money market funds and marketable securities purchased with less than ninety days until maturity) that total approximately $718.8 million, and marketable securities (U.S.
A percentage of our international operational expenses are denominated in foreign currencies, and exchange rate volatility could positively or negatively impact those operating costs. For the fiscal years ended September 30, 2022, October 1, 2021, and October 2, 2020, we had foreign exchange losses of $1.4 million, $0.5 million, and $5.9 million, respectively.
A percentage of our international operational expenses are denominated in foreign currencies, and exchange rate volatility could positively or negatively impact those operating costs. For the fiscal years ended September 29, 2023, September 30, 2022, and October 1, 2021, we had foreign exchange gains of $1.7 million and foreign exchange losses of $1.4 million and $0.5 million, respectively.
As of September 30, 2022, there were $700.0 million of borrowings outstanding under the Term Credit Agreement, and a potential change in the associated interest rates would be immaterial to the results of our operations.
As of September 29, 2023, there were $300.0 million of borrowings outstanding under the Term Credit Agreement, and a potential change in the associated interest rates would be immaterial to the results of our operations.
However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. For the fiscal year ended September 30, 2022, we had no outstanding foreign currency forward or options contracts with financial institutions. 35
However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. As of September 29, 2023, we had no outstanding foreign currency forward or options contracts with financial institutions. 36
Credit risk associated with our investments is not material because our investments are diversified across several types of securities with high credit ratings, which reduces the amount of credit exposure to any one investment.
Our marketable securities consist of short-term and long-term maturity periods between 90 days and two years. Credit risk associated with our investments is not material because our investments are diversified across several types of securities with high credit ratings, which reduces the amount of credit exposure to any one investment.
Removed
Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Our marketable securities consist of short-term and long-term maturity periods between 90 days and two years.

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