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What changed in Skyworks Solutions's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Skyworks Solutions's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+191 added−185 removedSource: 10-K (2024-11-15) vs 10-K (2023-11-17)

Top changes in Skyworks Solutions's 2024 10-K

191 paragraphs added · 185 removed · 156 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCrucially, 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.
Biggest changeThese advancements will deliver more bandwidth, faster speeds, and enable applications like virtual reality, augmented reality, live video streaming, and seamless IoT connectivity. 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.
Our 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.
Our 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 • 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 8 Table of Contents • 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.
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.
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 networking.
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.
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 resources, and protection of our intellectual property.
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.
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 reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
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.
Skyworks’ Strategy 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.
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.
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 have implemented commercial 5G networks, and the world’s leading smartphone manufacturers have launched multiple generations of 5G-enabled devices.
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.
For further information regarding customer concentrations, see Note 14 to Item 8 of this Annual Report on Form 10-K. 9 Table of Contents 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.
(“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.
(“Apple”), Arcadyan, Arris, Bose, Ciena, Cisco, 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, and Xiaomi.
Our customers value the scale of our global supply chain, our innovative technology, our ability to curate and deliver unique solutions, and our system engineering expertise, resulting in deep customer loyalty. We partner with our customers to support their long-term product road maps and are valued as a system solutions provider rather than just a point product vendor.
Our customers value the scale of our global supply chain, our innovative technology, our ability to curate and deliver unique solutions, and our system engineering expertise, resulting in deep customer loyalty. We partner with our customers to support their long-term product road maps and are valued as a system solutions provider rather than just a discrete product vendor.
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.
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 Table of Contents excess or obsolete inventory, which could result in inventory write-downs and, in turn, could have a material adverse effect on our financial condition.
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.
Additionally, Wi-Fi ® 7, the next generation of Wi-Fi ® technology, complements 5G by providing high-speed wireless connectivity in local environments. Faster data rates and improved efficiency cater to the growing number of devices reliant on wireless networks. We believe AI can be a catalyst for more efficient and effective wireless communications.
In addition, most of our customers have mandated that our operations and our products comply with various “green” initiatives and workers’ rights initiatives initiated by such customers, industry groups in which such customers participate, or the jurisdictions in which such customers operate.
In addition, most of our customers have mandated that our operations and our products comply with various sustainability initiatives and workers’ rights initiatives initiated by such customers, industry groups in which such customers participate, or the jurisdictions in which such customers operate.
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
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 Table of Contents
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 ® .
Skyworks helps facilitate these opportunities with highly customized solutions that support a broad set of wireless systems and protocols including cellular (such as 5G), Wi-Fi ® , GPS, Bluetooth ® , Accutime™, HD-Radio™, LoRa ® , Thread ® , Wi-Sun ® , and Zigbee ® .
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.
Our product portfolio is reinforced by a library of approximately 5,000 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.
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.
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 10,100 employees located around the world, more than 99% of whom are full-time employees.
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.
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 $631.7 million, $606.8 million, and $617.9 million in research and development during fiscal 2024, fiscal 2023, and fiscal 2022, respectively.
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.
Over the past two decades, Skyworks has made important investments to address 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.
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.
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, aligning employee efforts and responsibilities with performance measurement. Accountability is paramount, and we compensate our employees through a pay-for-performance methodology.
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.
In each of the fiscal years ended September 27, 2024 (“fiscal 2024”), September 29, 2023 (“fiscal 2023”), and September 30, 2022 (“fiscal 2022”), 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.
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.
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 are also a leader in passive devices, advanced integration, including proprietary shielding and 3-D die stacking, as well as SAW, TC-SAW, and BAW filters.
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.
Targeted investments in next-generation technology and solutions, technical talent, and fabrication capabilities have created the opportunity to expand 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 hybrid manufacturing model allows us to better balance our manufacturing capacity with the demand of the marketplace, resulting in a strong return on invested capital on a broader range of revenue. Additionally, we continue to drive reductions in product design and manufacturing cycle times and further improve product yields.
This hybrid manufacturing model allows us to better balance our manufacturing capacity with the demand of the marketplace. Additionally, we continue to drive reductions in product design and manufacturing cycle times and further improve product yields.
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.
A widening range of use cases is driving the high demand for wireless data across a broad array of applications. 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.
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.
From endpoint devices to data centers, generative AI applications will drive the need for higher speed and higher bandwidth networks, while increasing the requirements for our precision timing solutions. 6 Table of Contents 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 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.
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.
As of September 27, 2024: • Our workforce was distributed geographically approximately as follows: 54% in Mexico, 25% in the United States, 19% in Asia, 1% in Canada, and less than 1% in Europe. • Our workforce was distributed by function approximately as follows: 41% in individual contributor manufacturing roles, 35% in engineering or technician roles, 11% in managerial roles, and 13% in professional or other administrative roles. • Approximately 3,400 of our employees in Mexico, 570 of our employees in Singapore, and 440 of our employees in Japan were covered by collective bargaining and other union agreements.
From our breakthrough Sky5 ® unifying platform to our 5G small cell solutions, our approach across both infrastructure and user equipment facilitates powerful, high-speed, end-to-end 5G connectivity. Skyworks’ Strategy Our ambitious vision is to connect everyone and everything, all the time.
From our breakthrough Sky5 ® unifying platform to our 5G small cell solutions, our approach across both infrastructure and user equipment facilitates powerful, high-speed, end-to-end 5G connectivity.
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.
The information contained on our website is not incorporated by reference in this Annual Report on Form 10-K and the inclusion of our website address in this report is an inactive textual reference only. Our SEC filings are also available to the public at www.sec.gov. Industry Background Wireless connectivity is expanding on a global basis.
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 these markets we leverage our scale, intellectual property, and worldwide distribution network, which spans approximately 6,000 customers and 6,000 unique products. 7 Table of Contents Delivering Operational Excellence Through advanced supply chain management, we combine our highly specialized internal manufacturing capabilities with alliances and strategic relationships for leading-edge technologies.
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.
We expect to see a continued expansion in data consumption, dependent on seamless and reliable wireless connectivity. A few statistics illustrate this point.
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ITEM 1. BUSINESS. Skyworks Solutions, Inc., together with its consolidated subsidiaries (“Skyworks” or the “Company”), is empowering the wireless networking revolution.
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ITEM 1. BUSINESS. Skyworks Solutions, Inc., together with its consolidated subsidiaries (“Skyworks” or the “Company”), is a leading developer, manufacturer and provider of analog and mixed-signal semiconductor products and solutions for numerous applications, including aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearables.
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The Company’s highly innovative analog and mixed-signal semiconductors are connecting people, places, and things, spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearable markets.
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According to the 2024 Ericsson Mobility Report, global mobile data for 5G is estimated to triple in the next three years, driven by new users, innovative services, and the convergence of artificial intelligence (“AI”) and 5G technology, and by 2029, it is estimated that approximately 39 billion connections will be related to the IoT, including connected cars, machines, meters, sensors, point-of-sale terminals, consumer electronics and wearables.
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A widening range of use cases is driving an insatiable demand for ubiquitous wireless data across a broad array of applications.
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Connected cars are forecasted by McKinsey to make up 95% of new vehicles sold globally by 2030.
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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 trend towards increasing front-end and analog design challenges in smartphones and other platforms plays directly into our core strengths. Additionally, accelerating AI trends could catalyze the smartphone transformation with incremental content driving unprecedented functional and physical densities.
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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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Further, the Company’s three largest accounts receivable balances comprised 80% and 83% of aggregate gross accounts receivable as of September 27, 2024 and September 29, 2023, respectively.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+23 added−12 removed149 unchanged
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.
Biggest changeSuch fluctuations may be influenced by many factors, including: • uncertainty regarding the condition and prospects of the domestic and foreign economies, • our performance and prospects, and the performance and prospects of our major customers and competitors, • the volatility of the financial markets, • instability in global credit and financial markets, • 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, • domestic and international tax, fiscal, and trade policy decisions, • our ability to successfully identify, acquire, and integrate acquisition candidates, and • the extent of the impact of global health events. 25 Table of Contents Public stock markets have experienced price and trading volume volatility.
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.
Beginning in fiscal 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.
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.
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, sustainability, internal and disclosure control obligations, securities regulation, competition, data privacy and protection, employment, and labor relations.
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.
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.
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.
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 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.
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.
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.
However, we cannot ensure that these security measures and monitoring efforts will be sufficient to prevent or mitigate the damage caused by a cybersecurity incident or network disruption, and our systems may be vulnerable to hacking, insider threats, employee error or manipulation, theft, system malfunctions, or other adverse events.
However, we cannot ensure that our cybersecurity program or these security measures and monitoring efforts will be sufficient to prevent or mitigate the damage caused by a cybersecurity incident or network disruption, and our systems may be vulnerable to hacking, insider threats, employee error or manipulation, theft, system malfunctions, or other adverse events.
These incidents, which might be related to industrial, state-sponsored, and/or economic espionage, or financial cyber extortion or fraud, include covertly introducing malware and spyware to our computers, networks, and products (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.
Further, these incidents, which might be related to industrial, state-sponsored, and/or economic espionage, or financial cyber extortion or fraud, include covertly introducing malware and spyware to our computers, networks, and products (or to an electronic system operated by a third party for our benefit) and impersonating authorized users, among others.
While we have implemented a compliance program to ensure our product offering meets these regulations, there may be instances where alternative substances will not be available or commercially feasible, or may only be available from a single source, or may be significantly more expensive than their restricted counterparts.
While we have implemented a compliance program intended to ensure our product offering meets these regulations, there may be instances where alternative substances will not be available or commercially feasible, or may only be available from a single source, or may be significantly more expensive than their restricted counterparts.
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.
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 the Middle Eastern region, 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, floods, rising sea levels, as well as other impacts of climate change, • acts of terrorism, widespread illness, the effects of global health crises on business conditions in our industry or in the jurisdictions in which we do business, or other deterioration of public health conditions, and war, • misappropriation or other unauthorized transfers of our 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, 12 Table of Contents • 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 • limitations on our ability under local laws to protect or enforce our intellectual property rights in a particular foreign jurisdiction.
If any of our subcontractors experiences capacity constraints or financial difficulties, suffers any damage to its facilities, experiences power outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner and/or at cost-competitive rates.
If any of our subcontractors experiences capacity constraints or financial difficulties, suffers any damage to its facilities, experiences outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner and/or at cost-competitive rates.
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, the future growth of our business is likely to require the expansion or improvement 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.
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.
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.
Due to the amount of time that it usually takes us to qualify assembly and test subcontractors, we could experience significant delays and/or increased costs in product shipments if we are required to find alternative assembly and test subcontractors for our components.
Due to the amount of time that it usually takes to qualify assembly and test subcontractors, we could experience significant delays and/or increased costs in product shipments if we are required to find alternative assembly and test subcontractors for our components.
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).
These factors include, among others: • delays in the widespread deployment or adoption of commercial 5G networks, AI 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, such as AI, • 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).
We believe that the principal competitive factors for semiconductor suppliers in our markets include, among others: • rapid time-to-market and product ramps (including, but not limited to, high-volume product ramps), • timely new product innovation, • ability to capture design wins in new growth markets, such as 5G, • product quality, reliability, and performance, • ability of certain products, including “high reliability” solutions, to perform under stringent operating conditions, • product cost and selling price, • features available in products, • alignment with customer performance specifications, • compliance with industry standards, • strategic relationships with customers, • access to, and the protection and enforcement of, intellectual property, • ability to partner with or participate in reference designs of baseband vendors, • maintaining access to manufacturing capacity, raw materials, supplies, and services at a competitive cost, and • the ability to secure government incentives and grants, such as funding available to U.S. semiconductor manufacturers under the CHIPS and Science Act of 2022.
We believe that the principal competitive factors for semiconductor suppliers in our markets include, among others: • rapid time-to-market and product ramps (including, but not limited to, high-volume product ramps), • timely new product innovation, • ability to capture design wins in new growth markets, such as 5G, • product quality, reliability, and performance, • ability of certain products, including “high reliability” solutions, to perform under stringent operating conditions, • product cost and selling price, • features available in products, • alignment with customer performance specifications, • compliance with industry standards, • strategic relationships with customers, • access to, and the protection and enforcement of, intellectual property, • ability to partner with or participate in reference designs of baseband vendors, • maintaining access to manufacturing capacity, raw materials, supplies, and services at a competitive cost, and • the ability to secure government incentives and grants, such as funding available under the CHIPS and Science Act of 2022.
The verification and reporting requirements, in addition to customer demands for conflict-free sourcing, impose additional costs on us and on our suppliers, and may limit the sources or increase the prices of materials used in our products.
The verification and reporting requirements, in addition to any customer demands for conflict-free sourcing, impose additional costs on us and on our suppliers, and may limit the sources or increase the prices of materials used in our products.
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.
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 Table of Contents ITEM 1B.
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.
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.
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.
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.
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.
The agreements that govern 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.
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.
Our employees are in high demand, and our competitors and other companies may be able to offer compensation or other opportunities in excess of what we offer.
Many of our products are customized to the needs or specifications of a specific customer or have a limited number of potential buyers.
Many of our products are customized to the needs or specifications of a specific customer or have a limited number of potential alternative buyers.
Borrowings under the Revolving Credit Facility could be used for general corporate purposes and working capital needs of the Company and its subsidiaries. Indebtedness under our Term Loan Facility, Revolving Credit Facility, or the Notes could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions.
Borrowings under the Revolving Credit Facility could be used for general corporate purposes and working capital needs of the Company and its subsidiaries. Indebtedness under our Revolving Credit Facility or the Notes could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions.
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.
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, antimony, and rare earth metals, and the sales of our products in China and elsewhere.
We expect that these and other rapidly changing laws, regulations, policies, interpretations, and expectations, as well as increased enforcement actions by various governmental and regulatory agencies, will continue to increase the cost of our compliance and internal risk management programs and to alter the environment in which we do business, which could have a material adverse effect on our business, results of operations, and financial condition.
We expect that these and other rapidly changing laws, regulations, policies, interpretations, and expectations, as well as increased enforcement actions by various 22 Table of Contents governmental and regulatory agencies, will continue to increase the cost of our compliance and internal risk management programs and to alter the environment in which we do business, which could have a material adverse effect on our business, results of operations, and financial condition.
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.
Regardless of our actions: 23 Table of Contents • 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.
Furthermore, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act, which imposes a corporate alternative minimum tax of 15% on adjusted financial statement income for certain corporations, as well as an excise tax on corporate stock repurchases.
Furthermore, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”), which imposes a corporate alternative minimum tax (“CAMT”) of 15% on adjusted financial statement income for certain corporations, as well as an excise tax on corporate stock repurchases.
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.
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 expectations as a result of further reduction in overall market demand. We are dependent upon third parties for the supply of raw materials and components.
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.
Furthermore, countries where we are subject to taxes, including the United States, are evaluating their tax policies and rules on a regular basis, and we may see significant changes in legislation and regulations concerning taxation.
If our ESG practices and disclosures do not meet the expectations and standards of our stockholders, customers, and other industry stakeholders, our reputation and business activities may be negatively impacted and our appeal to certain investors may be reduced.
If our sustainability practices and disclosures do not meet the expectations and standards of our stockholders, customers, and other industry stakeholders, our reputation and business activities may be negatively impacted and our appeal to certain investors may be reduced.
Risks associated with cybersecurity and intellectual property protection We may not be able to prevent, or timely detect, information technology security breaches. Security breaches, phishing, spoofing, attempts by others to gain unauthorized access to our information technology systems, networks, and databases, and other cyberattacks continue to become more sophisticated and persistent and are sometimes successful.
Risks Associated with Cybersecurity and Intellectual Property Protection We may not be able to prevent, or timely detect, information technology security breaches. Security breaches, phishing, spoofing, attempts by others to gain unauthorized access to our information technology systems, networks, and databases, and other cyberattacks continue to become more sophisticated and persistent.
In addition, certain of our products contain firmware that incorporates or is derived from “open source” software that generally is made publicly available by its developers or other third parties.
In addition, certain of our products that we use contain firmware that incorporates or is derived from “open source” software that generally is made publicly available by its developers or other third parties.
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.
Bureau of Industry and Security’s Entity List (“Entity List”) or other entity lists, 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.
Additionally, we sell a portion of our products through third-party distributors, some of whom have rights to return products if the product is nonconforming. We may purchase and manufacture inventory based on estimates of customer demand for our products, which is difficult to predict and may not be accurate.
Additionally, we sell a portion of our products through third-party distributors, some of whom have rights to return products if the product is non-conforming. We may purchase and manufacture inventory based on estimates of customer demand for our products, which is difficult to predict and may not be accurate.
The cancellation or deferral of product orders, the return of previously sold products, overproduction due to a change in anticipated order volumes could result in 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, over-production due to a change in anticipated order volumes could result in 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.
Further, existing immigration laws, together with any changes to immigration policies or regulations in the United States, make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities (in the United States or abroad), limiting the pool of available talent.
Further, existing immigration laws and difficulties obtaining visas, together with any changes to immigration policies or regulations in the United States, make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities (in the United States or abroad), limiting the pool of available talent.
In addition, if a customer or distributor encounters financial difficulties of its own as a result of a change in demand or for any other reason, the customer’s or distributor’s ability to make timely payments against our accounts receivable could be impaired.
In addition, if a customer or distributor encounters financial difficulties of its own because of a change in demand or for any other reason, the customer’s or distributor’s ability to make timely payments against our accounts receivable could be impaired.
For example, the U.S. government has recently expanded export restrictions, and might continue expanding export restrictions, by adding certain Chinese entities to the U.S.
For example, the U.S. government has expanded export restrictions, and might continue expanding export restrictions, including by adding certain Chinese entities to the U.S.
Changes to such methods, assumptions, estimates, and judgments, combined with other factors that are difficult to forecast, including the factors listed above, could materially and adversely affect our quarterly or annual operating results and could produce actual operating results that differ significantly from previous estimates and projections.
Changes to such methods, assumptions, estimates, and judgments, combined with other factors that are difficult to forecast, including the factors listed above, could materially and adversely affect our quarterly or annual operating results and could produce actual operating results 14 Table of Contents that differ significantly from previous estimates and projections.
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.
On an ongoing 18 Table of Contents 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.
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.
Geopolitical tensions or conflicts, such as the ongoing conflict involving Russia and Ukraine, the conflicts in Israel and the Middle Eastern region and the tensions involving China and Taiwan, may create a heightened risk of cybersecurity incidents.
The proceeds of the Term Loan Facility and the issuance of Notes were used to finance a portion of the purchase price for the Company’s acquisition of certain assets, rights, and properties, and its assumption of certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business, on July 26, 2021 (the “Acquisition”).
The proceeds from the issuance of Notes were used to finance a portion of the purchase price for the Company’s acquisition of certain assets, rights, and properties, and its assumption of certain liabilities, comprising Silicon Labs’ Infrastructure and Automotive business, on July 26, 2021 (the “Acquisition”).
The loss of any member of our senior management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we operate.
The loss of any member of our senior management team could harm our ability to implement our business strategy and respond to the rapidly changing market conditions in which we 17 Table of Contents operate.
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.
In some instances, we depend on 21 Table of Contents 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.
As a result, certain competitors may be able to adapt more quickly than we can to new or emerging technologies and changes in customer requirements or may be able to devote greater resources to the development, promotion, and sale of their products than we can.
As a result, certain competitors may be able to adapt more quickly than we can to new or emerging technologies, such as AI, and changes in customer requirements or may be able to devote greater resources to the development, promotion, and sale of 20 Table of Contents their products than we can.
In part as a result of the COVID-19 pandemic, we have experienced supply constraints for certain materials and components, which has impacted, and could continue to impact, production lead times, the cost of such materials and components, and our ability to meet customer demand for our products.
In part as a result of the COVID-19 pandemic, we experienced supply constraints for certain materials and components, which impacted production lead times, the cost of such materials and components, and our ability to meet customer demand for our products.
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.
In addition, increasing governmental, investor, and societal attention on sustainability matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on sustainability topics such as climate change, carbon emissions, water usage, waste management, human capital, forced labor, and risk oversight, have expanded and could further expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
From time to time, it may be necessary to engage in litigation or like activities to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity, enforceability, and scope of proprietary rights of others, including our customers.
From time to time, we have engaged in and it may be necessary to continue to engage in litigation, administrative actions or like activities to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity, enforceability, and scope of proprietary rights of others, including our customers.
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 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 are exposed to interest rate risk through our Term Loan Facility and Revolving Credit Facility, both of which are subject to variable interest rates, and interest rate increases have led to increased interest payments.
We are exposed to interest rate risk through our Revolving Credit Facility, which is subject to variable interest rates, and interest rate increases have led to increased interest payments.
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.
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.
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.
Our sales are typically made pursuant to standard purchase orders and/or specified customer contracts, or both, 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.
If we lost one or more of these major customers, or if one or more major customers significantly decreased its orders for our products, our business, results of operations, and financial condition could be materially and adversely impacted, which could adversely affect our stock price.
If we lost one or more of these major customers, if one or more major customers significantly decreased its orders for our products, or if one or more major customers delay or do not make payments in a timely manner, our business, results of operations, and financial condition could be materially and adversely impacted, which could adversely affect our stock price.
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.
While we maintain insurance coverage to mitigate business continuity risks, among other risks, such coverage may be insufficient to cover all losses or all types of claims that may arise.
We may not continue to achieve design wins or to convert design wins into actual sales, and failure to do so could materially and adversely affect our operating results.
We do not obtain design wins on everything that we compete for, and we may not continue to achieve design wins or to convert design wins into actual sales. Failure to achieve design wins or to convert design wins into sales could materially and adversely affect our operating results.
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.
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 processing facilities in Osaka, Japan; and our packaging, assembly and test facilities in Mexicali, Mexico, and in Singapore (“Singapore Filter Manufacturing Facility”). Several of our key facilities are leased or subleased.
Future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to initiatives related to the Base Erosion and Profit Shifting Project of the Organisation for Economic Co-Operation and Development; the European Commission’s “state aid” investigations; enactment of a global corporate minimum tax; and other developments could have an adverse effect on the taxation of international businesses, including our own.
Future changes in tax laws, regulations, and treaties, or the interpretation thereof, in addition to initiatives related to the Base Erosion and Profit Shifting (“BEPS”) Project of the Organisation for Economic Co-Operation and Development (“OECD”), including Pillar One and Pillar Two; the European Commission’s “state aid” investigations; enactment of a global corporate minimum tax; and other developments could have an adverse effect on the taxation of our business, including reducing the availability of tax credits and payment of higher income taxes.
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.
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.
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.
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, privacy and information 13 Table of Contents security, indigenous innovation, and intellectual property rights and enforcement of those rights.
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.
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.
This competition has resulted in, and is expected to continue to result in, declining average selling prices for many of our products and increased challenges in maintaining or increasing revenue, gross margin, and market share.
From time to time, we have lost market share as a result of competition, and we could lose market share in the future. Also, this competition has resulted in, and is expected to continue to result in, declining average selling prices for many of our products and increased challenges in maintaining or increasing revenue, gross margin, and market share.
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.
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, outages or disruptions to our information technology infrastructure, including those portions provided by third parties, as well as equipment or software maintenance, repairs, updates, and/or upgrades.
Furthermore, our dependence on third-party carriers and logistics firms, many of which have been adversely affected by the COVID-19 pandemic, has resulted in, and could continue to result in, delays, increased costs, and expedite fees related to our product shipments. We face a risk that capital needed for our business will not be available when we need it.
Furthermore, our dependence on a few third-party carriers and logistics firms could result in delays, increased costs, and expedite fees related to our product shipments. We face a risk that capital needed for our business will not be available when we need it.
Risks associated with the development, manufacturing, and sale of our products Our operating results may be adversely affected by quarterly and annual fluctuations, market downturns, and recessions. Our revenues, earnings, and other operating results may fluctuate significantly on a quarterly and annual basis.
Risks Associated with the Development, Manufacturing, and Sale of Our Products Our operating results may be adversely affected by quarterly and annual fluctuations. Our revenues, earnings, and other operating results may fluctuate significantly on a quarterly and annual basis. These fluctuations are typically the result of a number of factors, many of which are beyond our control.
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”).
For further discussion, see Note 16 to Item 8 of this Annual Report on Form 10-K. 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”).
Furthermore, such losses would not be covered under our existing corporate insurance programs. In addition, in the event we are unable to fulfill our contractual obligations, lawsuits may be threatened or filed against us by customers or other third parties. Furthermore, force majeure clauses in our contracts could limit our ability to pursue remedies for certain third-party disruptions and delays.
Furthermore, such losses would not be covered under our existing insurance programs. In addition, in the event we are unable to fulfill our contractual obligations, lawsuits may be threatened or filed against us by customers or other third parties.
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.
In addition, the loss of certain members of our senior management team could harm our relationships with key customers and 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.
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.
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.
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.
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.
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.
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.
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.
In each of fiscal 2024, fiscal 2023, and fiscal 2022, one customer accounted for greater than ten percent of our net revenue. As of September 27, 2024, three customers represented 80% of our aggregate gross accounts receivable. For further discussion on customer concentration, see Note 14 to Item 8 of this Annual Report on Form 10-K.
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.
Any problems that we 16 Table of Contents 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.
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”).
In May 2021, the Company issued in a public offering $500 million of 1.80% Senior Notes due 2026 and $500 million of 3.00% Senior Notes due 2031 (collectively, the “Notes”), which Notes remain outstanding.
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.
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. Changes in legal interpretations, as well as additional guidance issued under these laws, could increase income tax liabilities and/or reduce certain tax benefits.
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.
If such assets are found to be impaired, they will be written down to estimated fair value, with a charge against earnings. We incurred indebtedness in connection with the acquisition of the Infrastructure and Automotive business of Silicon Labs, which could reduce our flexibility to operate our business.
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.
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.
Any such acceleration of our repayment obligations could have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or stock price. To be successful we may need to make additional investments and acquisitions, integrate companies we acquire, and/or enter into strategic alliances.
Any such acceleration of our repayment obligations could have a material adverse effect on our business, financial condition, results of operations, cash flows, and stock price. 19 Table of Contents Risks Associated with Our Industry The semiconductor industry is highly cyclical and subject to significant downturns.
Likewise, lower-than-expected demand could lead to underutilized manufacturing facilities, which could negatively impact our financial results. While we maintain insurance coverage to mitigate business continuity risks, among other risks, such coverage may be insufficient to cover all losses or all types of claims that may arise.
Likewise, lower-than-expected demand, could lead to underutilized manufacturing facilities, which could negatively impact our financial results.
As a result of reduced overall market demand, we recorded impairment charges during fiscal 2023.
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. As a result of reduced overall market demand, we recorded impairment charges during fiscal 2023 and renegotiated certain of these agreements in fiscal 2024.

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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 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.
Biggest changeThe following table sets forth our principal facilities: Location Owned/Leased Square Footage Primary Function Singapore, Singapore Leased 427,700 Filter manufacturing Osaka, Japan Owned (1) 383,600 Filter manufacturing Mexicali, Mexico Leased 378,000 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 98,300 Design center and office space (1) The Company owns the building and the land is leased for approximately 37 additional years expiring in 2061.

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. 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.
Biggest changeIssuer Purchases of Equity Securities The following table provides information regarding repurchases of common stock made during the three months ended September 27, 2024: 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) (2) 06/29/24 - 07/26/24 6,244 (3) $116.18 — $1.9 billion 07/27/24 - 08/23/24 10,615 (3) $108.30 — $1.9 billion 08/24/24 - 09/27/24 395 (3) $107.70 — $1.9 billion 17,254 — (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 2, 2023, was 8,175.
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 12, 2024, was 7,658.
(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
(3) 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.
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.
On November 12, 2024, the Company announced that the Board of Directors had declared a cash dividend of $0.70 per share of common stock, payable on December 24, 2024, to stockholders of record as of December 3, 2024.
Added
Future 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.
Added
(2) The Company’s net share repurchases are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred reduces the amount available under the repurchase program, as applicable, and is included in the cost of shares repurchased in the Consolidated Statement of Stockholders’ Equity.

Item 7. Management's Discussion & Analysis

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

31 edited+3 added−8 removed17 unchanged
Biggest changeOther 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.
Biggest changeInterest Expense Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Interest expense $ 30.7 (52.3)% $ 64.4 34.4% $ 47.9 % of net revenue 0.7 % 1.3 % 0.9 % The decrease in interest expense in fiscal 2024, as compared to fiscal 2023, was due to certain debt repayments that reduced the amount of outstanding indebtedness. 32 Table of Contents Other Income (Expense), Net Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Other income (expense), net $ 29.7 63.2% $ 18.2 828.0% $ (2.5) % of net revenue 0.7 % 0.4 % — % The increase in other income, net in fiscal 2024, as compared to fiscal 2023, was primarily due to an increase in interest income generated from cash, cash equivalents, and marketable securities.
We generally experience seasonal peaks during our fourth and first fiscal quarters (which correspond to the second half of the calendar year), primarily as a result of increased worldwide production of consumer electronics in anticipation of increased holiday sales, whereas our second and third fiscal quarters are typically lower and in line with seasonal industry trends.
We generally experience seasonal peaks during our fourth and first fiscal quarters (which correspond to the second half of the calendar year), primarily as a result of increased worldwide production of consumer electronics in anticipation of holiday sales, whereas our second and third fiscal quarters are typically lower and in line with seasonal industry trends.
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.
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.
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.
Our cost of goods sold consists primarily of purchased materials, labor, and overhead (including depreciation, share-based compensation expense, and amortization of acquisition intangibles) associated with product manufacturing. Erosion of average selling prices of established products is typical of the semiconductor industry.
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.
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 27, 2024, there were no borrowings outstanding under the revolving credit facility (the “Revolver”). The Revolving Credit Agreement expires July 26, 2026.
We base these estimates on the expected value method considering all reasonably available information, including our historical experience and current expectations, and are reflected in the transaction price when sales are recorded. Changes in actual demand or market conditions could adversely or beneficially impact our reserve calculations. Inventory Valuation .
We base these estimates on the expected value method considering all reasonably available information, including our historical experience and current expectations, and are reflected in the 34 Table of Contents transaction price when sales are recorded. Changes in actual demand or market conditions could adversely or beneficially impact our reserve calculations. Inventory Valuation .
Cash used in investing activities: Cash used in investing activities consists primarily of capital expenditures and cash paid related to the purchase of marketable securities, offset by cash received related to the sale or maturity of marketable securities.
Cash used in investing activities: Cash used in investing activities consists primarily of capital expenditures, cash paid to acquire intangible assets, and cash paid to purchase marketable securities, offset by cash received related to the sale or maturity of marketable securities.
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”).
Treasury and government securities, corporate bonds and notes, and municipal bonds. 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 U.S. generally accepted accounting principles (“GAAP”).
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.
Amortization of Intangibles Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Amortization of intangibles $ 0.9 (97.3)% $ 33.2 (66.4)% $ 98.9 % of net revenue — % 0.7 % 1.8 % The decrease in amortization expense in fiscal 2024, as compared to fiscal 2023, was primarily due to certain intangible assets that were acquired in prior fiscal years reaching the end of their useful lives.
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.
RESULTS OF OPERATIONS Fiscal Years Ended September 27, 2024, September 29, 2023, and September 30, 2022 The following table sets forth the results of our operations expressed as a percentage of net revenue.
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.
Net Revenue Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Net revenue $ 4,178.0 (12.5)% $ 4,772.4 (13.0)% $ 5,485.5 We market and sell our products indirectly through electronic components distributors and directly to OEMs of communications and electronics products, third-party original design manufacturers and contract manufacturers.
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.
See Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended September 29, 2023, filed with the SEC on November 17, 2023, as amended by Amendment No. 1 to such Annual Report on Form 10-K, filed with the SEC on January 26, 2024 (the “2023 10-K”), for Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended September 30, 2022.
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.
The $31.7 million decrease in cash provided by operating activities for fiscal 2024, as compared to fiscal 2023, was primarily related to lower net income, partially offset by favorable changes in working capital of $402.9 million, due primarily to a decrease in inventory and accounts receivable.
Fiscal 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.
Fiscal Years Ended September 27, 2024 September 29, 2023 September 30, 2022 Net revenue 100.0 % 100.0 % 100.0 % Cost of goods sold 58.8 55.8 52.5 Gross profit 41.2 44.2 47.5 Operating expenses: Research and development 15.1 12.7 11.3 Selling, general, and administrative 7.2 6.6 6.0 Amortization of intangibles — 0.7 1.8 Impairment, restructuring, and other charges 3.6 0.6 0.6 Total operating expenses 25.9 20.6 19.7 Operating income 15.3 23.6 27.8 Interest expense (0.7) (1.3) (0.9) Other income (expense), net 0.7 0.4 — Income before income taxes 15.2 22.6 26.9 Provision for income taxes 1.0 2.0 3.7 Net income 14.3 % 20.6 % 23.2 % General During the fiscal year ended September 27, 2024, the following key factors contributed to our overall results of operations, financial position, and cash flows: • Net revenue decreased 12.5% to $4,178.0 million in fiscal 2024, as compared to $4,772.4 million in fiscal 2023, driven primarily by a decrease in demand for our mobile, analog, and mixed-signal products. • Our ending cash, cash equivalents, and marketable securities balance increased 113.1% to $1,574.1 million in fiscal 2024, as compared to $738.5 million in fiscal 2023.
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.
Gross Profit Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Gross profit $ 1,720.8 (18.3)% $ 2,107.3 (19.1)% $ 2,604.3 % of net revenue 41.2 % 44.2 % 47.5 % Gross profit represents net revenue less cost of goods sold.
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.
LIQUIDITY AND CAPITAL RESOURCES Fiscal Years Ended (in millions) September 27, 2024 September 29, 2023 September 30, 2022 Cash and cash equivalents at beginning of period $ 718.8 $ 566.0 $ 882.9 Net cash provided by operating activities 1,824.7 1,856.4 1,424.6 Net cash used in investing activities (355.9) (224.4) (378.9) Net cash used in financing activities (819.0) (1,479.2) (1,362.6) Cash and cash equivalents at end of period $ 1,368.6 $ 718.8 $ 566.0 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.
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.
Provision for Income Taxes Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Provision for income taxes $ 40.4 (57.9)% $ 96.0 (52.3)% $ 201.4 % of net revenue 1.0 % 2.0 % 3.7 % We recorded a provision for income taxes of $40.4 million (which consisted of benefits of $41.5 million and $0.3 million related to United States federal and state income taxes, respectively, and a provision of $82.2 million related to foreign income taxes) and $96.0 million (which consisted of $62.0 million and $34.0 million related to United States and foreign income taxes, respectively) in fiscal 2024 and fiscal 2023, respectively.
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.
For information regarding this change in accounting estimate, see Note 2 to Item 8 of this Annual Report on Form 10-K. 31 Table of Contents Selling, General, and Administrative Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Selling, general, and administrative $ 300.8 (4.2)% $ 314.0 (4.8)% $ 329.8 % of net revenue 7.2 % 6.6 % 6.0 % 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 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 cash, cash equivalents, and marketable securities during fiscal 2024, was primarily due to cash generated from operations of $1,824.7 million, partially offset by 30 Table of Contents dividend payments of $439.1 million, repayments of debt of $300.0 million, capital expenditures of $157.0 million, and share repurchases of $77.3 million.
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.
Consistent with trends in the industry, we anticipate that average selling prices for our established products will continue to decline over time. 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.
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 33 Table of Contents $131.5 million increase in cash used in investing activities for fiscal 2024, as compared to fiscal 2023, was primarily related to a decrease of $207.5 million in sales of marketable securities, partially offset by a decrease of $17.9 million in purchases of marketable securities and a decrease of $53.3 million in cash used for capital expenditures.
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 decrease in selling, general, and administrative expenses in fiscal 2024, as compared to fiscal 2023, was primarily related to a gain on the sale of property, plant, and equipment, a decrease in professional services costs, and a decrease in share-based compensation expense.
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.
The decrease in net revenue in fiscal 2024, as compared to fiscal 2023, was driven primarily by a decrease in demand for our mobile, analog, and mixed-signal products. 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.
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”).
Liquidity: Cash, cash equivalents, and marketable securities totaled $1,574.1 million as of September 27, 2024, representing an increase of $835.6 million from September 29, 2023. We have outstanding $500.0 million of Notes Due 2026 and $500.0 million of Notes Due 2031. During fiscal 2024, 2023, and 2022, we repaid $300.0 million, $900.0 million, and $50.0 million of outstanding borrowings, respectively.
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.
Impairment, Restructuring, and Other Charges Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Impairment, restructuring, and other charges $ 150.0 430.0% $ 28.3 (7.8)% $ 30.7 % of net revenue 3.6 % 0.6 % 0.6 % Impairment, restructuring, and other charges in fiscal 2024 were primarily due to the abandonment or delay of previously capitalized in-process research and development (“IPR&D”) projects of $147.9 million and employee severance costs.
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.
The decrease in income tax expense in fiscal 2024, as compared to fiscal 2023, was primarily due to lower income from operations and a higher proportion of foreign income compared to domestic, partially offset by a decrease in the benefit from foreign-derived intangible income (“FDII”), an increase in tax expense related to a change in the reserve for uncertain tax positions, and an increase in the tax on global intangible low-taxed income (“GILTI”), net of foreign tax credits.
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 $660.2 million decrease in cash used in financing activities for fiscal 2024, as compared to fiscal 2023, was primarily related to a decrease of $600.0 million for the repayment of debt and a decrease of $98.0 million in stock repurchase activity, partially offset by an increase of $33.9 million in dividend payments.
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.
Research and Development Fiscal Years Ended (dollars in millions) September 27, 2024 Change September 29, 2023 Change September 30, 2022 Research and development $ 631.7 4.1% $ 606.8 (1.8)% $ 617.9 % of net revenue 15.1 % 12.7 % 11.3 % Research and development expenses consist primarily of direct personnel costs including share-based compensation expense, costs for pre-production evaluation units and testing of new devices, non-production masks, engineering prototypes, and design tool costs.
OVERVIEW We, together with our consolidated subsidiaries, are empowering the wireless networking revolution. Our highly innovative analog and mixed-signal semiconductors are connecting people, places, and things, spanning a number of new and previously unimagined applications within the aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearable markets.
OVERVIEW We, together with our consolidated subsidiaries, are a leading developer, manufacturer and provider of analog and mixed-signal semiconductor products and solutions for numerous applications, including aerospace, automotive, broadband, cellular infrastructure, connected home, defense, entertainment and gaming, industrial, medical, smartphone, tablet, and wearables.
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.
Many countries have implemented laws based on Pillar Two which will be effective for us in fiscal year 2025. We continue to evaluate the impact of proposed and enacted legislative changes to our effective tax rate as new guidance becomes available. See Note 8 to Item 8 of this Annual Report on Form 10-K for additional information regarding income taxes.
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.
The increase in research and development expenses in fiscal 2024, as compared to fiscal 2023, was primarily related to increases in certain headcount-related expenses and costs for engineering prototypes as a result of our increased investment in developing new technologies and products, partially offset by a decrease in share-based compensation expense and a decrease in depreciation expense as a result of extending the useful lives of certain machinery and equipment.
Removed
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.
Added
The decrease in gross profit in fiscal 2024, as compared to fiscal 2023, was primarily the result of an unfavorable product mix, lower unit volumes, and lower average selling prices.
Removed
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.
Added
Impairment, restructuring, and other charges in fiscal 2023 were primarily due to employee severance costs and impairment charges on divested assets.
Removed
Consistent with trends in the industry, we anticipate that average selling prices for our established products will continue to decline over time.
Added
Future changes in tax laws could arise related to the BEPS Project of the OECD, including Pillar One and Pillar Two; the European Commission’s “state aid” investigations; enactment of a global corporate minimum tax; and other developments that could have an adverse effect on the taxation of our business, including reducing the availability of tax credits and payment of higher income taxes.
Removed
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
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
We have a term credit agreement (the “Term Credit Agreement”) providing for a $1.0 billion term loan facility (the “Term Loan Facility”).
Removed
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.
Removed
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.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−3 removed2 unchanged
Biggest changeWe may enter into foreign currency forward and options contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows, and net investments in foreign subsidiaries.
Biggest changeHowever, fluctuations in currency exchange rates could have a greater effect on our business or results of operations in the future to the extent our expenses increasingly become denominated in foreign currencies. 35 Table of Contents We may enter into foreign currency forward and options contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows, and net investments in foreign subsidiaries.
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.
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.
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.
Based on our results of operations for the fiscal year ended September 27, 2024, 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are subject to overall financial market risks, such as changes in market liquidity, credit quality, investment risk, interest rate risk, and foreign exchange rate risk as described below.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are subject to overall financial market risks, such as changes in market liquidity, credit quality, investment risk, interest rate risk, and foreign exchange rate risk as described below. Investment and Interest Rate Risk Our exposure to interest rate and general market risks relates to our investment portfolio.
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
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 27, 2024, we had not entered into any outstanding foreign currency forward or options contracts with financial institutions. 36 Table of Contents
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.
Our investment portfolio consists of cash and cash equivalents (money market funds, corporate bonds and notes, and U.S. Treasury and government securities purchased with less than ninety days until maturity) that total approximately $1,368.6 million, and marketable securities (U.S.
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.
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.
Treasury 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.
Treasury and government securities, corporate bonds and notes, and municipal bonds) that total approximately $194.1 million and $11.4 million within short-term and long-term marketable securities, respectively, as of September 27, 2024. The main objectives of our investment activities are liquidity and preservation of capital.
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.
A percentage of our international operational expenses are denominated in foreign currencies, and exchange rate volatility could positively or negatively impact those operating costs.
Removed
Investment and Interest Rate Risk Our exposure to interest rate and general market risks relates to our Term Credit Facility, which has variable interest rates, and our investment portfolio.
Added
Our cash equivalent investments have short-term maturity periods that dampen the impact of market or interest rate risk. Our marketable securities have short-term maturity periods less than one year.
Removed
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.
Added
For the fiscal years ended September 27, 2024, September 29, 2023, and September 30, 2022, we had foreign exchange losses of $5.2 million, foreign exchange gains of $1.7 million, and foreign exchange losses of $1.4 million, respectively.
Removed
However, fluctuations in currency exchange rates could have a greater effect on our business or results of operations in the future to the extent our expenses increasingly become denominated in foreign currencies.

Other SWKS 10-K year-over-year comparisons