MRVL 10-K & 10-Q changes, risk factors and insider trading

•risks related to our ability to design, develop and introduce new and enhanced products, in particular in the ArtificialData Intelligence (“AI”), CloudCenter and 5GCommunications markets, in a timely and effective manner, as well as our ability to anticipate and adapt to changes in technology;

•risks related to changes in general macroeconomic conditions such as economic slowdowns, inflation, stagflation, high or rising interest rates, financial institution instability, and recessionsrecessions, as well as risks related to global economic conditions such as the current armed conflict in Israel and the Middle East;

•risks related to tariffs and trade restrictions with China, RussiaChina and other foreign nations including risks related to the ability of our customers, particularly in jurisdictions such as China that may be subject to trade restrictions (including the need to obtain export licenses) to develop their own solutions, vertically integrate which may reduce the need for our products, or acquire fully developed solutions from third parties;

•risks related to our ability to attract, retain and motivate a highly skilled workforce, especially engineering, managerial, sales and marketing personnelemployees;

Unfavorable or uncertain conditions in the AI,Data CloudCenter and 5GCommunications markets may cause fluctuations in our rate of revenue growth or financial results.

World-wide markets for our AI,data Cloudcenter and 5Gcommunications related products may not evolve in the manner or in the time periods we anticipate. If domestic and global economic conditions worsen, overall spending on our AI,data Cloudcenter and 5Gcommunications products may be reduced, which would adversely impact demand for our products in these markets. In addition, unfavorable developments with evolving laws and regulations worldwide related to these products and suppliers may limit global adoption, impede our strategy, and negatively impact our long-term expectations in this area. Even if the AI,data Cloudcenter and 5Gcommunications markets evolve in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers’ need in these markets, we may miss a significant opportunity and our business, financial condition, results of operations and cash flows could be materially and adversely affected. In addition, as a result of the fact that the markets for AI,data Cloudcenter and 5Gcommunication products are still evolving, demand for these products may be unpredictable and may vary significantly from one period to another. In addition, these markets may not develop as anticipated if AI training and inference costs drop dramatically due to customer adoption of less expensive alternative technologies. Further, the current level of capital expenditure (capex) on AI infrastructure may not be sustainable over the long term and a significant reduction in AI-related spending will likely harm our financial results. In addition, in the future our customers may decelerate or reallocate their capital expenditures for other uses, which could delay or reduce the demand for our products and negatively impact our revenue. In addition, rapidly evolving technologies, including AI, could change the business needs of our customers in the data center and communications markets in ways we are not yet able to predict. AI systems may make unforeseen or unintended discoveries that may disrupt our customers’ existing products, services, or business strategy and potentially render some of our customers current offerings and products obsolete which may have a material adverse effect on our revenue and profitability. See also, “Our sales are concentrated in a few large customers. If we lose or experience a significant reduction in sales to any of these key customers, if any of these key customers experience a significant decline in market share, or if any of these customers experience significant financial difficulties, our revenue may decrease substantially and our results of operations and financial condition may be harmed.” See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business” for additional risks related to export restrictions that may impact certain customers in the AI,data Cloudcenter and 5Gcommunications markets.

We receive a significant amount of our revenue from a limited number of customers which are comprised of both distributors and direct customers. For example, during fiscal 2025,2026, there were two customers (one distributor and one direct customer) whose revenues represented 10% or more of total net revenue. In addition, net revenue from our ten (10) largest customers, inclusive of our distributor and direct customers, represented 81%82% of our total net revenue for the fiscal year ended February 1, 2025.2026. Sales to our largest customers have fluctuated significantly from period to period and year to year and will likely continue to fluctuate in the future, primarily due to the timing and number of design wins with customers, the continued diversification of our customer base as we expand into new markets, adverse changes in the political and economic policies of the U.S. or other governments (such as changes in export policies), and natural disasters or other issues. The loss of any of our large customers or a significant reduction in sales we make to them would likely harm our financial condition and results of operations. For example, some of our large customers depend on rapid and continuous innovation and will select partners who can help them deliver innovation at their pace and if we are unable to deliver on these timelines we may miss significant business opportunities. To the extent one or more of our large customers experience financial challenges, bankruptcy or insolvency, this could have a material adverse effect on our sales and our ability to collect on receivables, which could harm our financial condition and results of operations. See also, “Note 2 – Significant Accounting Policies - Concentration of Credit Risk and Significant Customers” of our Notes to Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K for information on our significant customers for the current reporting period.

In addition, we are also subject to risk from inflation and increasing market prices of certain components, supplies, and commodity raw materials, which are incorporated into our end products or used by our manufacturing partners or suppliers to manufacture our end products. These components, supplies and commodities have from time to time become restricted, or general market factors and conditions have in the past and may in the future affect pricing of such components, supplies and commodities (such as inflation or supply chain constraints). As trade tensions escalate, our and our customers’ global supply chains may face disruptions, reducing international trade efficiency. See also, “Our gross margin and results of operations may be adversely affected in the future by a number of factors, including decreases in our average selling prices of products over time, shifts in our product mix, or price increases of certain components or third-party services due to inflation, supply chain constraints, or for other reasons.”

Moreover, the semiconductor industry has experienced increased consolidation over the past several years. For example, Renesas Electronics Corporation acquired Dialog Semiconductor in August 2021, Analog Devices acquired Maxim Integrated Products in 2021, AMD acquired Xilinx, Inc. in February 2022 and Pensando Systems in May 2022, Qualcomm acquired Veonner in April 2022, and Broadcom acquired VMware in November 2023. Consolidation among our competitors has led, and in the future could lead, to a changing competitive landscape, capabilities and market share, which could put us at a competitive disadvantage and harm our results of operations.

Additionally, because we do not operate our own manufacturing, assembly, testing or packaging facilities, we are not able to reduce our costs as rapidly as companies that operate their own facilities and our costs may even increase, which could also reduce our gross margin. Our margin could also be impactedimpacted, for exampleexample, by the following factors: increased costs (including increased costs caused by tariffs, inflation, higher interest rates, or supply chain constraints); loss of cost savings if parts ordering does not correctly anticipate product demand or if the financial health of either our manufacturers partners or our suppliers deteriorates; excess inventory, or inventory holding and obsolescence charges. In addition, we are subject to risks from fluctuating market prices of certain components, which are incorporated into our products or used by our suppliers to manufacture our products. Supplies of these components may from time to time become restricted, or general market factors and conditions such as inflation or supply chain constraints have in the past affected, currently affect and may in the future affect pricing of such commodities. For example, during the first few quarters of fiscal 2023 supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity and fab constraints resulted in increased lead times, inability to meet demand, and increased costs. Any increase in the price of components used in our products will adversely affect our margin.

Most of our products are manufactured by third-party foundries located in Taiwan, and other sources are located in China, Germany, South Korea, Singapore and the United States. In addition, most of our third-party assembly, testing and packaging facilities are located in China, Malaysia, Singapore, Taiwan and Canada. Because of the geographic concentration of most of these third-party foundries, as well as most of our assembly, testing and packaging subcontractors, we are exposed to the risk that their operations may be disrupted by regional events including, for example, droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic and future pandemics, or by political, social or economic instability, or by geopolitical tensions and conflicts. For example, we were impacted by COVID outbreaks in Asia in the first half of fiscal 2023 that resulted in closed factories, clogged ports and a shortage of workers as officials imposed lockdowns and mass testing requirements. In the case of such an event, our revenue, cost of goods sold and results of operations may be negatively impacted. In addition, there are limited numbers of alternative foundries capable of producing advanced technologies and identifying and implementing alternative manufacturing facilities would be time consuming. Although there is a movement in the U.S. to build more foundries locally and the U.S. government is providing funds or other incentives for certain companies to do so, we do not expect that such foundries will be available to us to produce certain types of advanced technologies any time soon, if ever. If we need to utilize alternate manufacturing facilities, either in Taiwan or elsewhereelsewhere, we could experience significant expenses and delays in product shipments, which could harm our results of operations.

We have in the past including in the first few quarters of fiscal 2023, and may in the future, experienceexperienced a number of industry-wide supply constraints affecting the type of high complexity products we provide for data infrastructure. These supply constraints have impacted, and in the future may impact, the kitting process for our products.constraints. These supply challenges have in the past, and may in the future, limitlimited our ability to fully satisfy demand for some of our products.

While we attempt to create multiple sources for our products, most of our products are not manufactured at more than one foundry at any given time, and our products typically are designed to be manufactured in a specific process at only one of these foundries. Accordingly, if one of our foundries is unable to provide us with components as needed, it would be difficult for us to transition the manufacture of our products to other foundries, and we could experience significant delays in securing sufficient supplies of those components. Any disruption to our foundry partners could result in a material decline in our revenue, net income and cash flow. In addition, our assemblyassembly, testing and packaging partners may be single sourced and it may be difficult for us to transition to other manufacturing partners for these services.

During the first few quarters of fiscal 2023, supply shortages in the semiconductor industry of multi-layer complex substrates, IC packaging capacity, and specific wafer process node constraints resulted in increased lead times, inability to meet demand, and increased costs. Because of the geographic concentration of some of these suppliers, we are exposed to the risk that their operations may be disrupted by regional events including droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic, or by political, social or economic instability. In addition, while the Russian invasion of Ukraine has not had a direct material impact on us due to our limited sales to Russia and Ukraine, we are unable to predict the indirect impact this conflict will have on us due to impacts on the supply chain, global and domestic economies, interest rates and stock markets. Moreover, while Israel’s declaration of war on Hamas, a U.S. designated Foreign Terrorist Organization, andthe current armed conflict in Israel and the GazaMiddle StripEast is not currently expected to have a material impact on us, we are unable to predict the full impact this conflict will have on us or our operations in Israel due to impacts on the supply chain, global and domestic economies, interest rates and stock markets.

The fabrication of our products is a complex and technically demanding process. Our manufacturing partners have from time to time experienced manufacturing defects and lower manufacturing yields, which are difficult to detect at an early stage of the manufacturing process and may be time consuming and expensive to correct. Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by our foundries could result in lower than anticipated manufacturing yields or unacceptable performance. In addition, we may face lower manufacturing yields and reduced quality in the process of ramping up and diversifying our manufacturing partners. Poor yields from our manufacturing partners, or defects, integration issues or other performance problems with our products could cause us significant customer relations and business reputation problems, harm our financial performance and result in financial or other damages to our customers. Our customers could also seek damages in connection with product liability claims, which would likely be time consuming and costly to defend. In addition, defects could result in other significant costs. See also, “Costs related to defective products could have a material adverse effect on us.”

We have in the past, and may continue to, make custom or semi-custom products on an exclusive basis for some of our customers for a negotiated period of time. The percentage of our sales related to custom or semi-custom products has been increasing over the last few years. Any revenue from sales of our custom or semi-custom products is directly related to sales of the third-party customer’s products and reflective of their success in the market. We have no control over the marketing efforts of these third-party customers and cannot make any assurances that sales of their products will be successful in current or future years. The demand for our custom products also depends on how well they perform in the customer’s intended application. Even if we execute according to the customer’s specifications, there is no guarantee that the customer’s design will meet their performance needs. In addition, if these customers are bought by our competitors or other third parties, they may terminate agreements related to these custom or semi-custom products or otherwise limit our access to technology necessary for the production of these products. As a result, there may be no other customers for these products due to their custom or semi-custom nature. Consequently, we may not fully realize our expectations for custom or semi-custom product revenue and our operating results may be adversely affected.

Our future success will depend on our ability to develop and introduce new products and enhancements to our existing products that address customer requirements, in a timely and cost-effective manner and are competitive as to a variety of factors. For example, we must successfully identify customer requirements and design, develop and produce products on time that compete effectively as to price, functionality and performance. We sell products in markets that are characterized by rapid technological change, evolving industry standards, frequent new product introductions, and increasing demand for higher levels of integration and smaller process geometries. If we do not accurately predict which new product features or requirements our customers will want in the future and adjust our business ahead of time, we could lose market share, face unexpected costs, and accumulate excess inventory, which would negatively affect our business and results of operations. See also, “We rely on our customers to design our products into their systems, and the nature of the design process requires us to incur expenses prior to customer commitments to use our products or recognizing revenues associated with those expenses which may adversely affect our financial results.”

We make highly complex semiconductor solutions and, accordingly, there is a risk of defects in our products. Such defects can give rise to the significant costs noted below. Moreover, since the cost of replacing defective products is often much higher than the value of the products themselves, we are subject to damage claims from customers in excess of the amounts they pay us for our products, including consequential damages. We also face exposure to potential liability resulting from the fact that our customers typically integrate the semiconductor solutions we sell into numerous consumer products, including automobiles.products. We are exposed to product liability claims if our semiconductor solutions or the consumer products integrated with our semiconductor solutions (such as automobiles), malfunction and lead to personal injury or death.malfunction. In addition, our customers may issue recalls on their products if they prove to be defective or make compensatory payments in accordance with industry or business practice or in order to maintain good customer relationships. If such recalls or payments are the result of a defect in one of our products, our customers may seek to recover all or a portion of their losses from us. Recalls of our customers’ products in certain end-markets, such as with our automotive and base station customers, may cause us to incur significant costs.

•the diversion of the attention of our engineering personnelemployees from product development efforts;

Despite our best efforts, security vulnerabilities may exist with respect to our products. Mitigation techniques designed to address such security vulnerabilities, including software and firmware updates or other preventative measures, may not operate as intended or effectively resolve such vulnerabilities. Software and firmware updates and/or other mitigation efforts may result in performance issues, system instability, data loss or corruption, unpredictable system behavior, or the theft of data by third parties, any of which could significantly harm our business and reputation. We may depend on our business partners or on other third parties, such as customers and end users, to deploy our mitigations alone or as part of their own mitigations, and they may delay, decline or modify the implementation of such mitigations. See also, “Cybersecurity risks could adversely affect our business and disrupt our operations.”

Regulatory activity, such as tariffs, export controls and sanctions, economic sanctionssanctions, and related laws have in the past and may continue to materially limit our ability to make sales to customers in China, which has in the past and may continue to harm our results of operations, reputation and financial condition. Moreover, to the extent the governments of China, the United States or other countries seek to promote use of domestically produced products or to reduce the dependence upon or use of products from another country (sometimes referred to as “decoupling”), they may adopt or apply regulations or policies that have the effect of reducing business opportunities for us. Such actions may take the form of specific restrictions on particular customers, products, technology areas, or business combinations. For example, in the area of investments and mergers and acquisitions, the United States announced new requirements for approval by the United States government of outbound investments; and the approval by China regulatory authorities is required for business combinations of companies that conduct business in China over specific thresholds, regardless of where those businesses are based. Restrictions may also be imposed based on whether the supplier is considered unreliable or a security risk. For example, the Chinese government adopted a law that would restrict purchases from suppliers deemed to be “unreliable suppliers”. In May 2023, the Cyberspace Administration of China banned the sale of Micron Technology, Inc.’s products to certain entities in China and stated that such products pose significant security risks to China's critical information infrastructure supply chain and national security. ThenIn addition, China has in Julythe 2023,past Chinaand announcedmay restrictions onin the future use export ofcontrols galliumto restrict rare earth minerals, and geranium,access bothto ofrare whichearth areminerals has been used in the manufacturepast ofand semiconductors,could statingbe thatused suchin restrictionsthe arefuture intendedas toa protectgeopolitical China’stool nationalin security.trade negotiations between the United States and China. In addition, China has responded, seemingly in retaliation to a 10% tarifftariffs on imported goods, by announcing antitrust probes against certain U.S. technology companies. While we are not currently the subject of such an antitrust probe, there can be no assurance that such a probe will not be initiated in the future, which may result in substantial costs and may divert our attention and resources. While we do not expect these announced restrictions to materially impact us, any export restrictions reducing our ability to manufactureconduct our productsbusiness can adversely impact our revenues, profits and results of operations.

Concerns that semiconductors are necessary for national security, manufacturing and critical infrastructure, as well as concerns of their potential use to restrict human rights, has led to increased U.S. export restrictions impacting sales of semiconductors and semiconductor technology to China or specific customers in China. While most of our products that are shipped to China are processed and placed into larger systems, after which they are distributed to customers in global markets outside of China, a small portion of our products are shipped into China and remain there. For example, the addition of certain companies to the Entity List, which places export restrictions on certain foreign persons or entities by the U.S. Department of Commerce’s Bureau of Industry and Security,Security (the “BIS”), has dampened demand for our products. Due to the U.S. government restricting sales to certain customers in China, sales to some customers require licenses for us to export our products; however, in the past some of these licenses have been delayed or denied and there can be no assurances that requests for future licenses will be approved by the U.S. government. In addition, certain existing export licenses to China may be revoked due to changes in U.S. government policy. In February 2022, the U.S. National Science and Technology Council published an updated list of critical and emerging technologies, which includes semiconductors, as part of an ongoing effort to identify advanced technologies that are potentially significant to U.S. national security, which could result in more stringent export controls or a greater number of our products requiring a license for export to China. In addition, the U.S. Department of Commerce Bureau of Industry and Security recentlyBIS released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S. national security and foreign policy concerns. The regulations published in October 2022 includeincluded new restrictions on U.S. persons with respect to activities that are not subject to the Export Administration Regulations (“EAR”), which differs from the agency’s historical approach of controlling items that are subject to the EAR, and the regulations published in October 20232023, imposeNovember 2024, and January 2025 expanded the October 2022 rule imposing additional licensing requirements for exports to China (and certain other countries) of integrated circuits exceeding certain performance thresholds.thresholds, expanding the jurisdiction of the EAR to more foreign made items in certain cases, amending the definition of advanced node, and adding further entities to the Entity List. In January 2025, the AI Diffusion Rule was issued. Then in May 2025, the BIS said it intends to cancel the AI Diffusion Rule and release new rules. The BIS announcement creates uncertainty about what products, technologies, or software might be covered by future rules. Export restrictions reducing our sales of products to China, have in the past and may in the future adversely impact our revenues, profits and results of operations. In January 2025, the AI Diffusion Rule and the Foundry Due Diligence Rule were issued. While we do not expect these January 2025 restrictions to materially impact us, any export restrictions reducing our ability to manufacture our products can adversely impact our revenues, profits and results of operations.

Changes to U.S. or foreign tax, trade policy, government incentives, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.

Changes in U.S. or foreign international tax, social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business have in the past and could in the future adversely affect our business. For example, while the Russian invasion of Ukraine (including related export and other business sanctions on Russia) has not had a material impact on us due to our limited sales to Russia and Ukraine, we are unable to predict the indirect impact this conflict will have on us through impacts to the supply chain, the global and domestic economies, interest rates or stock markets. The U.S. government has in the past, and may in the future, instituted or proposed changes in trade policies that included the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business. For example, onin May2025 14,and 2024,2026, the Bidencurrent presidential administration announced new tariffs on certain goods to encourage China to eliminate unfair trade practices regarding technology transfer, intellectual property, and innovation. The Biden administration directed increases in tariffs on a significant amount of imports from China across certain strategic sectors including semiconductors. As a result, the tariff rate on certain types of semiconductors increased from 25% to 50% in 2024. In addition, the Trump administration has recently announced new tariffs on imports from many countries including Canada, China and Mexico. These new tariffs arehave not expected to havehad a directsignificant impact on the Company, however, any new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, andwhich certainmay foreignadversely governmentsimpact haveour instituted or are considering imposing trade sanctions on certain U.S. goods.business.

For example, we are subject to risks related to Israel’s declaration of war on Hamas, a U.S. designated Foreign Terrorist Organization and the current armed conflict in Israel and the GazaMiddle Strip.East. We have employees in Israel. These employees may be impacted by: (1) disruptions to operations and business continuity, including physical damage or impaired access to company facilities, offices or technology, and disruptions in access to electricity, gasoline or water, and (2) workforce disruptions, including the mobilization of employees who are members of the Israeli military reserves to active duty, disrupted communication with employees in the conflict zone and restrictions on movement in areas subject to armed conflict. While these disruptions are not currently expected to have a material impact on us, at this time we are unable to predict the full impact this conflict will have on us and our employees in the future.

We depend heavily on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business. We routinely collect and store sensitive data in our information systems, including intellectual property and other proprietary information about our business and that of our customers, suppliers and manufacturing and other business partners. These information technology systems are subject to damage or interruption from several potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, nation state advanced persistent threats, misconfigurations, third-party cloud or SaaS outages, vendor errors causing operational interruptions, insider threats or other events. Cyber-attacks may include phishing or other forms of social engineering attacks, exploits of code or system configurations, malicious code, such as viruses and worms, ransomware attacks, zero day vulnerabilities and undisclosed security flaws exploited by threat actors, nation-state cyber warfare attacks, supply chain and third-party cyber-attacks, denial-of-service attacks and other actions granting unauthorized access to our technology infrastructure or information systems or those of our customers, suppliers and manufacturing and other business partners. In addition, we have in the past and may in the future be the target of email phishing attacks that attempt to acquire personal information or Company assets. As AI capabilities improve and become increasingly commonplace, we may see cyberattacks leveraging AI technology. These attacks could be crafted with an AI tool to directly attack information systems with increased speed and/or efficiency compared to a human threat actoractor, accelerate reconnaissance and exploit development, or create more effective phishing emails. In addition, a vulnerability could be introduced from the result of our or our customers and business partners incorporating the output of an AI tool, such as AI generated source code,code or configurations, that includesare ainsecure threat.or contain malicious artifacts.

We have implemented cybersecurity processes, as discussed in more detail below, taking guidance from recognized cybersecurity frameworks to mitigate risks; however, we cannot guarantee that those risk mitigation measures will be effective.effective across all environments, including those operated under shared-responsibility models with certain cloud and SaaS providers. See Item 1C, “Cybersecurity” of this Annual Report on Form 10-K for additional information about our cybersecurity processes.

We have not experienced a material information security breach in the last three years, and as a result, we have not incurred any net expenses from such a breach. We have not been penalized or paid any amount under an information security breach settlement over the last three years. Further, we annually assess our insurance policy and have determined not to purchase cyber related insurance. Cyber-attacks have become increasingly more prevalent and much harder to detect, defend against or prevent. The risk of state-sponsored or geopolitical-related cybersecurity incidents has also increased recently due to geopolitical tensions or incidents, such as the Russian invasion of Ukraine and the armed conflict in Israel and the GazaMiddle Strip.East, and other regional tensions affecting the semiconductor supply chain. While we have historically been successful in defending against the cyber-attacks and breaches mentioned above, given the frequency of cyber-attacks and resulting breaches reported by other businesses and governments, it is likely we will experience one or more material breaches of some extent in the future. We have incurred and may in the future incur significant costs to implement, maintain and/or update security systems we believe are necessary to protect our information systems, to recover and restore operations and after an incident, and to meet legal, regulatory, contractual, and disclosure obligations, or we may miscalculate the level of investment necessary to protect our systems adequately. Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures.measures on a timely basis.

Our business also requires us to work with and in some cases to share confidential information with manufacturing partners, suppliers, customers and other third parties. Although we take steps to secure our confidential information that is provided to third parties, such measures may not always be effective. Data breaches, losses or other unauthorized access to or releases of confidential information have in the past occurred with these third parties and material data breaches, losses or other unauthorized access to, or releases of, our confidential information may in the future occur in connection with third-party breaches that could materially adversely affect our reputation, financial condition and operating results and could result in liability or penalties under data privacy laws. In addition, we may be subject to losses of access to all or part of our systems because of our use of third-party services or software, which losses may not always be the result of malicious activity, and we cannot guarantee that any such future outages will not materially impact the Company.

To the extent that any system failure, accident or security breach results in material disruptions or interruptions to our operations, or those of our customers, suppliers and manufacturing and other business partners, or the theft, loss or disclosure of, or damage to our data or confidential information, including our intellectual property, our reputation, business, results of operations and/or financial condition could be materially adversely affected. Such events could also trigger regulatory inquiries, notification and disclosure obligations, contractual penalties, or delays in product development, tape-out, or shipments.

As of FebruaryJanuary 1,31, 2025,2026, we had a total of $4.1$4.5 billion debt outstanding, which consisted of $3.5 billion of senior notes outstandingoutstanding. Our Revolving Credit Facility was amended and $590.6restated millionin outstandingJune 2025 (the “2025 Revolving Credit Facility” or the “2025 Credit Agreement”). We may borrow up to $1.5 billion under ourthe 2026 Term Loan. We also had $1.0 billion of availability under our 20232025 Revolving Credit Facility. As of January 31, 2026, the 2025 Revolving Credit Facility was undrawn.

•exposing us to interest rate risk to the extent of our variable rate indebtedness, particularly in the current environmentevent of high or rising interest rates; and

Although the 2025 Credit AgreementsAgreement containcontains restrictions on our ability to incur additional indebtedness and the indentures governing the Notes (together, the “Notes Indentures”) contain restrictions on creating liens and entering into certain sale-leaseback transactions, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness, liens or sale-leaseback transactions incurred in compliance with these restrictions could be substantial.

The 2025 Credit Agreements,Agreement, the Notes Indentures and the indenture governing the MTI Senior Notes contain customary events of default upon the occurrence of which, after any applicable grace period, the lenders would have the ability to immediately declare the loans due and payable in whole or in part. In such event, we may not have sufficient available cash to repay such debt at the time it becomes due, or be able to refinance such debt on acceptable terms or at all. Any of the foregoing could materially and adversely affect our financial condition and results of operations.

The 2025 Credit AgreementsAgreement and the Notes Indentures impose restrictions on our business.

The 2025 Credit AgreementsAgreement and the Notes Indentures each contains a number of covenants imposing restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. The restrictions, among other things, restrict our ability and our subsidiaries’ ability to create or incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, pay dividends, transfer or sell assets and make restricted payments. These restrictions are subject to a number of limitations and exceptions set forth in the 2025 Credit AgreementsAgreement and the Notes Indentures. Our ability to meet the leverage ratio set forth in the 2025 Credit AgreementsAgreement may be affected by events beyond our control.

The foregoing restrictions could limit our ability to plan for, or react to, changes in market conditions or our capital needs. We do not know whether we will be granted waivers under, or amendments to, our 2025 Credit AgreementsAgreement or to the Notes Indentures if for any reason we are unable to meet these requirements, or whether we will be able to refinance our indebtedness on terms acceptable to us, or at all.

We may not be able to generate sufficient cash flow to enable us to service our indebtedness, including the Notes, or to make anticipated capital expenditures. Our ability to pay our expenses and satisfy our debt obligations, refinance our debt obligations and fund planned capital expenditures will depend on our future performance, which will be affected by general economic, financial, competitive, legislative, regulatory and other factors beyond our control. If we are unable to generate sufficient cash flow from operations or to borrow sufficient funds in the future to service our debt, we may be required to sell assets, reduce capital expenditures, refinance all or a portion of our existing debt (including the Notes) or obtain additional financing. In addition, if our credit ratings are downgraded, the cost of current or future borrowings under our 2025 Credit AgreementsAgreement may rise and our ability to obtain additional financing or refinance our existing debt may be negatively affected. We cannot assure you that we will be able to refinance our debt, sell assets or borrow more money on terms acceptable to us, if at all. If we cannot make scheduled payments on our debt, we will be in default and holders of our debt could declare all outstanding principal and interest to be due and payable, and we could be forced into bankruptcy or liquidation. In addition, a material default on our indebtedness could suspend our eligibility to register securities using certain registration statement forms under SEC guidelines that permit incorporation by reference of substantial information regarding us, potentially hindering our ability to raise capital through the issuance of our securities and increasing our costs of registration.

We will be required to repurchase the Notes at the option of each holder upon the occurrence of a change of control repurchase event as defined in the Notes Indentures. However, we may not have sufficient funds to repurchase the Notes in cash at the time of any change of control repurchase event. Our failure to repurchase the Notes upon a change of control repurchase event would be an event of default under the Notes Indentures and could cause a cross-default or acceleration under the 2025 Credit AgreementsAgreement and certain future agreements governing our other indebtedness. The repayment obligations under the Notes may have the effect of discouraging, delaying or preventing a takeover of our company. If we were required to repurchase the Notes prior to their scheduled maturity, it could have a significant negative impact on our cash and liquidity and could impact our ability to invest financial resources in other strategic initiatives.

We are a leading supplier of data infrastructure semiconductor solutions, spanning the data center core to network edge. We are a fabless supplier of high-performance semiconductor products with core strengths in developing and scaling complex System-on-a-Chip architectures, integrating analog, mixed-signal and digital signal processing functionality. Leveraging leading intellectual property and deep system-level expertise, as well as highly innovative security firmware, our solutions are empowering the data economy and enabling the data center, enterprise networking, carrier infrastructure, consumer,center and automotive/industrialcommunications and other end markets.

Our fiscal year is the 52- or 53-week period ending on the Saturday closest to January 31. Accordingly, every fifth or sixth fiscal year will have a 53-week period. The additional week in a 53-week yearperiod is added to the fourth quarter, making such quarter consist of 14 weeks. Fiscal 2024 had a 53-week period. Fiscal 20252026 and fiscal 20232025 each had a 52-week period. Fiscal 2024 had a 53-week period.

Net revenue in fiscal 20252026 was $5.8$8.2 billionbillion, and was 5%42% higher than net revenue of $5.5$5.8 billion in fiscal 2024.2025. This was due to an 88% increaseincreases in sales from the data center end market comparedby to46% fiscaland 2024.from the communications and other end market by 31%. The increase was partially offset by decreasesa decrease in sales from theour carrierautomotive infrastructureethernet endproduct marketportfolio bydue 68%, fromto the enterprisedivestiture networkingof endour marketautomotive byethernet 49%,business fromat the consumerbeginning end market by 49% and fromof the automotive/industrialthird endquarter marketof byfiscal 17%.2026.

We have seen strongStrong revenue growth from our data center endmarket market,was driven by robustAI-related demand for our interconnectcustom products and customelectro-optics computeportfolio. products from AI applications. In addition,Additionally, following a period of inventory correction, we have startedcontinued to see demandrevenue stabilizerecovery in our enterprise networkingcommunication and carrier infrastructureother end markets.market growing significantly compared to fiscal 2025.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, provisions for sales returns and allowances, inventory excess and obsolescence, goodwill and other intangible assets, business combinations, restructuring, government incentives, income taxes, litigation, and other contingencies. We base our estimates of the carrying value of certain assets and liabilities on historical experience and on various other assumptions that are believed to be reasonable under the circumstances when these carrying values are not readily available from other sources. Actual results could differ from these estimates, and such differences could affect the results of operations reported in future periods. In the current macroeconomic environment, these estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For further information on our significant accounting policies, see “Note 2 – Significant Accounting Policies” in the Notes to Consolidated Financial Statements.

Inventories. We value our inventory at the lower of cost or net realizable value, cost being determined under the first-in, first-out method. We regularly review inventory quantities on hand and record a reduction to the total carrying value of our inventory for any difference between cost and estimated net realizable value of inventory that is determined to be excess, obsolete or unsellable inventory based primarily on our estimated forecast of product demand and production requirements. The estimate of future demand is compared to our inventory levels, including open purchase commitments, to determine the amount, if any, of obsolete or excess inventory. Demand for our products can fluctuate significantly from period to period. A significant decrease in demand could result in an increase in the amount of excess inventory on hand. In addition, our industry is characterized by rapid technological change, frequent new product development and rapid product obsolescence that could result in an increase in the amount of obsolete inventory quantities on hand. Additionally, our estimates of future product demand and judgementjudgment to determine excess inventory may prove to be inaccurate, in which case we may have understated or overstated the reduction to the total carrying value of our inventory for excess and obsolete inventory. In the future, if our inventory is determined to be overvalued, we would be required to recognize such costs in our cost of goods sold at the time of such determination. Likewise, if our inventory is determined to be undervalued, we may have over-reported our cost of goods sold in previous periods and would be required to recognize additional gross margin at the time the related inventory is sold. Therefore, although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have a significant impact on the value of our inventory and our results of operations.

Accounting for Income Taxes. We estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual tax expense together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets.

As a multinational corporation, we conduct our business in many countries and are subject to taxation in many jurisdictions. The taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions. Our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses, the tax laws and regulations in various jurisdictions, the availability of tax incentives, tax credits and loss carryforwards, and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, and the evolution of regulations and court rulings and tax audits. There can be no assurance that we will accurately predict the outcome of audits, and the amounts ultimately paid on resolution of audits could be significantly different than the amounts previously included in our income tax expense andand, therefore, could have a significant effect on our tax provision, results of operations, and cash flows. Consequently, taxing authorities may impose tax assessments or judgments against us that could significantly affect our tax liability and/or our effective income tax rate.

We are subject to income tax audits by the respective tax authorities in the jurisdictions in which we operate. We recognize the effect of income tax positions only if these positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more than 50% likely to be realized. Changes in judgment regarding the recognition or measurement of uncertain tax positions are reflected in the period in which the change occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. The calculation of our tax liabilities involves the inherent uncertainty associated with complex tax laws. We believe we have adequately provided forfor, in our financial statementsstatements, additional taxes that we estimate to be required to be paid as a result of such examinations. While we believe that we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than our accrued position. Unpaid tax liabilities, including the interest and penalties, are released pursuant to a final settlement with tax authorities, completion of audit or expiration of various statutes of limitations. The significant jurisdictions in which we may be subject to examination by tax authorities throughout the world include Germany, India, Israel, Singapore, and the United States.

Business Combinations. We allocate the fair value of the purchase considerationconsideration, including any contingent consideration, of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. OurThe valuationaccounting offor acquiredbusiness assetscombinations requires management to make significant estimates and assumed liabilities requires significant estimates,assumptions, especially with respect to the fair value of intangible assets.assets Theand contingent consideration, in which we typically use the income approach methodology. Critical estimates used for the valuation of acquired intangible assets,assets incan particular,include, requiresbut thatare wenot uselimited valuationto, techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates: future expectedforecasted revenue, expenses, capital expenditures and other costs, and discount rates. Critical estimates used for the valuation of contingent consideration can include, but are not limited to, probability of achievement, stock price, performance period, volatility and other relevant assumptions. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred.

Years Ended January 31, 2026 and February 1, 2025 and February 3, 2024

Our net revenue for fiscal 20252026 increased by $259.6$2.4 millionbillion compared to net revenue for fiscal 2024.2025. This was primarily due to ana 88%46% increase in sales from the data center end market which benefited from strong AIAI-related demand. TheSales increasefrom wasthe communications and other end market also increased by 31%, which has continued to recover due to normalizing customer inventory levels and strong adoption of our products, partially offset by a decrease in sales from theour carrierautomotive infrastructureethernet endproduct marketportfolio bydue 68%, fromto the enterprisedivestiture networkingof endour marketautomotive byethernet 49%,business fromat the consumerbeginning end market by 49%, and fromof the automotive/industrialthird endquarter marketof byfiscal 17%, which have been navigating inventory corrections and soft industry demand.2026.

Cost of goods sold as a percentage of net revenue was relatively flatdecreased for fiscal 20252026 compared to fiscal 2024.2025, Cost of goods sold in fiscal 2025which was impactedprimarily bydue to impairment charges of $357.9 million for acquired intangible assets, inventories, property and equipment, and other non-current assets associated with restructuring actions during fiscal 2025. See “Note 4 – Restructuring” in the Notes to Consolidated Financial Statements for further information. CostThe decrease in cost of goods sold inas fiscala 2024percentage of net revenue was impactedalso due to better cost absorption driven by chargeshigher forrevenues, partially offset by a shift in product related claim matters, that were fully resolved in the fourth quarter of fiscal 2024.mix. As a result, gross margin for fiscal 20252026 decreasedincreased 0.3by 9.7 percentage points compared to fiscal 2024.2025.

Research and development expense increased by $54.2$124.8 million in fiscal 20252026 compared to fiscal 2024.2025. The increase was primarily due to $34.0 million of higher employeeoverall compensationspending to support our R&D initiatives, including advanced IP development and related costs and $33.1 million of higher engineeringcustomer design relatedwin costs. The increases were partially offset by a decrease in stock-based compensation of $15.5 million.activity.

Selling, general and administrative expense decreased by $35.8$31.1 million in fiscal 20252026 compared to fiscal 2024.2025. The decrease was primarily due to chargeslower amortization expense for anacquired intellectualintangible property matter during fiscal 2024, as well as $22.7 million of lower depreciation and amortization expense. The decreases were partially offset by higher employee compensation and related costs of $9.8 million.assets.

Restructuring Related ChargesCharges, Net

We recognized $353.9 million ofnet restructuring related charges of $15.5 million in fiscal 20252026 as we continued to evaluate our existing operations to increase operational efficiency, decrease costs and increase profitability. Restructuring charges for fiscal 2025 were mainly comprised of impairment and write-off of purchased technology licenses and property and equipment, as well as recognition of future contractual obligations, severance, other one-time termination benefits, and other costs. See “Note 4 – Restructuring” in the Notes to Consolidated Financial Statements for further information.

Interest and Other Loss,Income (Loss), Net

Our provision for incomes taxes may be affected by changes in the geographic mix of earnings with different applicable tax rates, acquisitions,acquisitions or divestitures, changes in the realizability of deferred tax assets, accruals related to contingent tax liabilities and period-to-period changes in such accruals, the results of income tax audits, the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities and changes in tax laws and regulations. It is also possible that significant negative evidence may become available that causes us to conclude that a valuation allowance is needed on certain of our deferred tax assets, which would adversely affect our income tax provision in the period of such change in judgment.

Our Annual Report on Form 10-K for the fiscal year ended February 3,1, 20242025 includes a discussion and analysis of our financial condition and results of operations for the year ended JanuaryFebruary 28,3, 20232024 and year-to-year comparisons between the years ended February 1, 2025 and February 3, 2024 and January 28, 2023 in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our principal source of liquidity as of FebruaryJanuary 1,31, 20252026 consisted of approximately $948.3$2.6 millionbillion of cash and cash equivalents, of which approximately $716.9$642.0 million was held by subsidiaries outside of the United States, a portion of which are deemed to be indefinitely reinvested. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States. See “Note 12 – Income Taxes” in the Notes to Consolidated Financial Statements for further information.

As of FebruaryJanuary 1,31, 2025,2026, we had total borrowings outstanding of $4.1$4.5 billion, consisting of $3.5 billion of senior notes outstandingoutstanding, andof $590.6which $499.8 million outstandingare underdue thewithin 2026twelve Term Loan.months.

ForDuring thefiscal year ended February 1, 2025,2026, we repaid $109.4$590.6 million of the principal outstanding of the 5-Year Tranche Loan (“2026 Term Loan”).

We may elect to factor trade accounts receivable from time to time as part of our overall liquidity and working capital management strategy. During the year ended FebruaryJanuary 1,31, 2025,2026, we generated cash from operations from the sale of certain trade accounts receivable on a non-recourse basis to a third-party financial institution pursuant to a factoring arrangement. See “Note 15 – Supplemental Financial Information” in the Notes to Consolidated Financial Statements for additional information.

World-wide markets for our data center and communications related products may not evolve in the manner or in the time periods we anticipate. If domestic and global economic conditions worsen, overall spending on our data center and communications products may be reduced, which would adversely impact demand for our products in these markets. In addition, unfavorable developments with evolving laws and regulations worldwide related to these products and suppliers may limit global adoption, impede our strategy, and negatively impact our long-term expectations in this area. Even if the data center and communications markets evolve in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers’ need in these markets, we may miss a significant opportunity and our business, financial condition, results of operations and cash flows could be materially and adversely affected. In addition, as a result of the fact that the markets for data center and communication products are still evolving, demand for these products may be unpredictable and may vary significantly from one period to another. For example, AI-related data center deployment may happen more slowly than our customers or the market anticipate if developers face labor shortages, supply chain bottlenecks, power and water procurement constraints, permitting delays, and heightened community opposition to proposed data center projects. Public resistance to data center siting has intensified as the scale of AI-era facilities has grown, with concerns centered on strain to local energy grids and water supplies, increased consumer utility rates, persistent industrial noise, diminished air quality, loss of open space or rural character, and limited local employment relative to the resources consumed. These concerns have led to organized opposition, rezoning denials, litigation, and legislative action at the state and local levels. Because our data center business depends in part on the timing and scale of our customers' AI infrastructure deployments, any delay, reduction, or geographic limitation in data center buildout resulting from these factors could delay or reduce demand for our products and adversely affect our revenue growth and results of operations. In addition, these markets may not develop as anticipated if AI training and inference costs drop dramatically due to customer adoption of less expensive alternative technologies. Further, the current level of capital expenditure (capex) on AI infrastructure may not be sustainable over the long term and a significant reduction in AI-related spending will likely harm our financial results. In addition, in the future our customers may decelerate or reallocate their capital expenditures for other uses, which could delay or reduce the demand for our products and negatively impact our revenue. In addition, rapidly evolving technologies, including AI, could change the business needs of our customers in the data center and communications markets in ways we are not yet able to predict. AI systems may make unforeseen or unintended discoveries that may disrupt our customers’ existing products, services, or business strategy and potentially render some of our customers current offerings and products obsolete which may have a material adverse effect on our revenue and profitability. In July 2026, bipartisan AI oversight legislation was introduced, which could establish U.S. government oversight over “cutting-edge AI models” in a manner that may encompass our products. See also, “Our sales are concentrated in a few large customers. If we lose or experience a significant reduction in sales to any of these key customers, if any of these key customers experience a significant decline in market share, or if any of these customers experience significant financial difficulties, our revenue may decrease substantially and our results of operations and financial condition may be harmed.” See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers havemay reducedreduce the demand for our products and damageddamage our business” for additional risks related to export restrictions that may impact certain customers in the data center and communications markets.

In addition to the above risks related to economic conditions, the U.S. has implemented a series of tariffs targeting various nations and industries. These announcements have triggered global reactions, affecting markets, slowing global economic growth, and heightening concerns about broader financial instability. Tariffs and escalations of trade tensions between the U.S. and its trading partners, especially China, and the decoupling of global economies could result in a global economic slowdown and long-term changes to global trade. See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers havemay reducedreduce the demand for our products and damageddamage our business” and “Changes to U.S. or foreign tax, trade policy, government incentives, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.”

Moreover, the semiconductor industry has experienced increased consolidation over the past several years. For example, AMD acquired Xilinx, Inc. in February 2022 and Pensando Systems in May 2022, Qualcomm acquired Veonner in April 2022, and Broadcom acquired VMware in November 2023.2023 and in August 2026 AMD announced its intent to acquire Taalas Inc. Consolidation among our competitors has led, and in the future could lead, to a changing competitive landscape, capabilities and market share, which could put us at a competitive disadvantage and harm our results of operations.

MostTaiwan Semiconductor Manufacturing Company Limited ("TSMC") is currently our sole source foundry for all of our productsadvanced areprocess-node manufactured by third-party foundries located in Taiwan, and other sources are located in China, Germany, South Korea, Singapore and the United States.wafers. In addition, most of our third-party assembly, testing and packaging facilities are located in China, Malaysia, Singapore, Taiwan and Canada. Because of the geographic concentration of most of these third-party foundries,business partners, including our dependence on TSMC in Taiwan, as well as most of our assembly, testing and packaging subcontractors, we are exposed to the risk that their operations may be disrupted by regional events including, for example, droughts, earthquakes (particularly in Taiwan and elsewhere in the Pacific Rim close to fault lines), tsunamis or typhoons, severe storms, power outages, or by actual or threatened public health emergencies such as the COVID-19 pandemic and future pandemics,emergencies, or by political, social or economic instability, or by geopolitical tensions and conflicts. For example, we were impacted by COVID outbreaks in Asia in the first half of fiscal 2023 that resulted in closed factories, clogged ports and a shortage of workers as officials imposed lockdowns and mass testing requirements. In the case of such an event, our revenue, cost of goods sold and results of operations may be negatively impacted. In addition, there are limited numbers of alternative foundries capable of producing advanced technologies and identifying and implementing alternative manufacturing facilities would be time consuming.consuming and expensive. Although there is a movement in the U.S. to build more foundries locally and the U.S. government is providing funds or other incentives for certain companies to do so, we do not expect that such foundries will be available to us to produce certain types of advanced technologies any time soon, if ever. If we need to utilize alternate manufacturing facilities, either in Taiwan or elsewhere, we could experience significant expenses and delays in product shipments, which could harm our results of operations.

The ability of each of our manufacturing partners to provide us with materials and services is limited by its available capacity and existing obligations. WhenCurrently, the demand for our products is strong, and availability of our partners’ capacityto mayprovide besufficient constrainedcapacity, orincluding notadvanced available,process andnode withwafers, to meet customer demand is constrained. With certain exceptions our vendorspartners are not obligated to perform services or supply products to us for any specific period, in any specific quantities, or at any specific price, except as may be provided in a particular purchase order. We place our orders on the basis of our customers’ purchase orders or our forecast of customer demand, and most of our manufacturing partners can allocate capacity to the production of other companies’ products and reduce deliveries to us on short notice. It is possible that our manufacturing partners will prioritize and allocate additional supply to their customers thatwho are larger and better financed than we are or that have long-term agreements with our main foundries may induce them to reallocate capacity to those customers. Most of our manufacturing partners may reallocate capacity to their customers offering them a better margin or rate of return than provided by us. This reallocation could impair our ability to secure the supply of components that we need.them. Moreover, if any of our third-party manufacturing partners or other suppliers are unable to secure the necessary raw materials from their suppliers, lose benefits under material agreements, experience power outages or labor shortages, or lack sufficient capacity to manufacture our products, encounter financial difficulties or suffer any other disruption or reduction in efficiency, we may encounter supply delays or disruptions, which could harm our business or results of operations.

There are a very limited number of foundries and consolidation of the foundries that provide services to us or to the semiconductor industry due to bankruptcy or through business combinations, including mergers, asset acquisitions and strategic partnerships may adversely impact us. A foundry, supplier or other manufacturing partner could become unavailable to us if it is acquired by a competitor or a large company that may change the scope of the offerings. Or a foundry may not be suitable for us if it does not invest in, or have the ability to manufacture, advanced technologies. In particular, as we and others in our industry transition to smaller geometries, our manufacturing partners may be supply constrained or may charge premiums for these advanced technologies, which may harm our business or results of operations. See also, “We may experience increased actual and opportunity costs as a result of our transition to smaller geometry process technologies.” In addition, a foundry or supplier may become unavailable to us as a result of economic or political instability. Any disruption to our manufacturing partners could result in a material decline in our revenue, net income and cash flow.

While we attempt to create multiple sources for our products, mostMost of our products are not manufactured at more than one foundry at any given time, and our products typically are designed to be manufactured in a specific process at only one of these foundries. In particular, TSMC is currently the sole wafer supplier for our advanced node products, including our 3nm products. Accordingly, if one of our foundriesfoundries, including TSMC, is unable to provide us with components as needed, it would be difficult for us to transition the manufacture of our products to other foundries, and we could experience significant delays in securing sufficient supplies of those components. Any disruption to our foundry partners could result in a material decline in our revenue, net income and cash flow. In addition, our assembly, testing and packaging partners may be single sourced and it may be difficult for us to transition to other manufacturing partners for these services.

In order to secure sufficient capacity when demand is high and to mitigate the risks described in the foregoing paragraph, we have entered into, and in the future may enter into, various arrangements with certain manufacturing partners or other suppliers that could be costly and harm our results of operations, such as nonrefundable deposits with, or loans to, such parties in exchange for capacity commitments, or contracts that commit us to purchase specified quantities of components over extended periods. In particular, we have entered into a capacity reservation agreement with TSMC pursuant to which we agreed to make substantial advance payments in exchange for wafer capacity over a multi-year period. Under this arrangement, we are required to purchase specified target quantities of wafers during the term, and if we do not meet such target quantities, we may forfeit a proportional portion of our advance payments. We may not be able to make such arrangements in the future in a timely fashion or at all, and any arrangements may be costly, reduce our financial flexibility, and not be on terms favorable to us. Moreover, if we are able to secure capacity, we may be obligated to use all of that capacity or incur penalties. These penalties may be expensive and could harm our financial results.

We haveare currently in the past and may in the future, experienced a number of industry-wide supply constraints.constrained environment. These supply challenges have in the past, and may in the future, limited our ability to fully satisfy demand for some of our products. For example, there has and continues to be a tight supply environment for AI related components and manufacturing resources, such as advanced wafer fabrication, advanced packaging, and large body substrates which have in the past and may continue to resultresults in increased lead times, inability to meet demand, and increased costs.

In order to remain competitive, we have transitioned, and expect to continue to transition, our semiconductor products to increasingly smaller line width geometries. We periodically evaluate the benefits, on a product-by-product basis, of migrating to smaller geometry process technologies. We also evaluate the costs of migrating to smaller geometry process technologies including both actual costs such as increased mask costs and wafer costs and increased costs related to EDA (electronic design automation) tools and the opportunity costs related to the technologies we choose to forego. These transitions are imperative for us to be competitive with the rest of the industry and to target some of our product development in high growth areas to these advanced nodes, which has resulted in significant initial design and development costs. After the Synopsys-Ansys merger, three companies are expected to control approximately 75% of the global EDA market and this concentration in EDA tools that we rely on for chip design may raise the risk of reduced vendor choice and increased pricing to us in connection with our design workflows.

Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers havemay reducedreduce the demand for our products and damageddamage our business.

Concerns that semiconductors are necessary for national security, manufacturing and critical infrastructure, as well as concerns of their potential use to restrict human rights, has led to increased U.S. export restrictions impacting sales of semiconductors and semiconductor technology to China or specific customers in China. While most of our products that are shipped to China are processed and placed into larger systems, after which they are distributed to customers in global markets outside of China, a small portion of our products are shipped into China and remain there. For example, the addition of certain companies to the Entity List, which places export restrictions on certain foreign persons or entities by the U.S. Department of Commerce’s Bureau of Industry and Security (the “BIS”), has dampened demand for our products. Due to the U.S. government restricting sales to certain customers in China, sales to some customers require licenses for us to export our products; however, in the past some of these licenses have been delayed or denied, and there can be no assurances that requests for future licenses will be approved by the U.S. government. In addition, certain existing export licenses to China may be revoked due to changes in U.S. government policy. In February 2022, the U.S. National Science and Technology Council published an updated list of critical and emerging technologies, which includes semiconductors, as part of an ongoing effort to identify advanced technologies that are potentially significant to U.S. national security, which could result in more stringent export controls or a greater number of our products requiring a license for export to China. In addition, the BIS released new controls on the export of advanced computing and semiconductor manufacturing items to China as well as transactions related to supercomputer end-uses in China with the aim of addressing U.S. national security and foreign policy concerns. The regulations published in October 2022 included new restrictions on U.S. persons with respect to activities that are not subject to the Export Administration Regulations (“EAR”), which differs from the agency’s historical approach of controlling items that are subject to the EAR, and the regulations published in October 2023, November 2024, and January 2025 expanded the October 2022 rule imposing additional licensing requirements for exports to China (and certain other countries) of integrated circuits exceeding certain performance thresholds, expanding the jurisdiction of the EAR to more foreign made items in certain cases, amending the definition of advanced node, and adding further entities to the Entity List. In January 2025, the AI Diffusion Rule was issued. Then in May 2025, the BIS said it intends to cancel the AI Diffusion Rule and release new rules. The BIS announcement creates uncertainty about what products, technologies, or software might be covered by future rules. Export restrictions reducing our sales of products to China, have in the past and may in the future adversely impact our revenues, profits and results of operations.

On April 14, 2025, the BIS announced the initiation of investigations into the effects on U.S. national security of imports of semiconductors under Section 232 of the Trade Expansion Act of 1962. The scope of the investigation includes semiconductors, semiconductor manufacturing equipment, and their derivative products including semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics, and other components. BIS transmitted its report to the President on December 22, 2025, concluding that imports of these products threaten U.S. national security given that the U.S. currently fully manufactures only approximately 10 percent of the chips it requires. While the resultsSecretary’s ofreport thishas investigationnot arebeen currentlypublicly unknown,released, the investigation may result in additional tariffs and trade restrictions, which may adversely impact our business.

In addition, the U.S. government has in the past, and may in the future, adopted policies that discourage corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including through tariffs or penalties on goods manufactured outside the U.S., which required us to change the way we conduct business. Political changes and trends such as populism, protectionism, economic nationalism and sentiment toward multinational companies and resulting changes to trade, tax or other laws and policies may be disruptive to our businesses. These changes in U.S. and foreign laws and policies have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations. See also, “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers havemay reducedreduce the demand for our products and damageddamage our business” and “Changes in existing taxation benefits, tax rules or tax practices may adversely affect our financial results.”

We benefit from agreements with governmental agencies that incentivize investment within the jurisdictions through refunds or other credits associated with the investments. Receipt of benefits under incentive agreements may depend on several factors, including but not limited to, our ability to fulfill commitments regarding employment of personnel, investment, or performance of specified activities in the applicable jurisdictions as well as changes in foreign laws.laws, and are subject to government agency reviews and audits of qualifying expenditures. In addition, changes in our business plans, including divestitures, as well as changes to applicable laws, regulations, or government interpretations and audits could result in loss of benefits and termination of or renegotiation of an agreement. If our incentive agreement were terminated or renegotiated, or if our ultimate benefits received isare less than we have recognized, results of operations and our financial position could be harmed.

A substantial portion of our business is conducted outside of the United States and, as a result, we are subject to foreign business, political and economic risks. Most of our products are manufactured by our manufacturing partners outside of the United States. Most of our current qualified integrated circuit foundries are located in the same region within Taiwan. In addition, our primary assembly, testing and packaging subcontractors are located in the Pacific Rim region. For example, a substantial amount of our revenue is derived from products manufactured in Taiwan and as a result, disruptions to business in Taiwan, whether political, military, natural disasters or other events will adversely impact our business. In addition, many of our customers have operations located outside of the United States, primarily in Asia, which further exposes us to foreign risks. Sales shipped to customers with operations in Asia represented approximately 83%84% and 74%76% of our net revenue in the three months ended MayAugust 2,1, 2026 and MayAugust 3,2, 2025, respectively.

We depend heavily on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business. We routinely collect and store sensitive data in our information systems, including intellectual property and other proprietary information about our business and that of our customers, suppliers and manufacturing and other business partners. These information technology systems are subject to damage or interruption from several potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware, power failures, cyber-attacks, nation state advanced persistent threats, misconfigurations, third-party cloud or SaaS outages, vendor errors causing operational interruptions, insider threats or other events. Cyber-attacks may include phishingphishing, smishing, vishing or other forms of social engineering attacks, exploits of code or system configurations, malicious code, such as viruses and worms, ransomware attacks, zero day vulnerabilities and undisclosed security flaws exploited by threat actors, nation-state cyber attacks, supply chain and third-party cyber-attacks, denial-of-service attacks and other actions granting unauthorized access to our technology infrastructure or information systems or those of our customers, suppliers and manufacturing and other business partners. In addition, we have in the past and may in the future be the target of email phishing attacks that attempt to acquire personal information or Company assets. As AI capabilities improve and become increasingly commonplace, we may see cyberattacks leveraging AI technology. These attacks could be crafted with an AI tool to directly attack information systems with increased speed and/or efficiency compared to a human threat actor, accelerate reconnaissance and exploit development, or create more effective phishing emails. AI-generated or manipulated audio, video or other content may also be used to impersonate our employees, executives, customers, suppliers or other business partners, facilitate fraud or obtain unauthorized access to our systems or information. In addition, a vulnerability could be introduced from the result of our or our customers and business partners incorporating the output of an AI tool, such as AI generated source code or configurations, that are insecure or contain malicious artifacts. Our use, or unauthorized or inappropriate use, of AI tools may also expose confidential, proprietary, personal or other sensitive information. AI systems may be susceptible to prompt injection, data or model poisoning or other manipulation that could cause them to disclose information, produce malicious or inaccurate outputs, or take unintended or unauthorized actions. The use of remote working arrangements at the Company and our business partners may present additional operational risks and attack vectors to our IT Systems.

Our business also requires us to work with and in some cases to share confidential information with manufacturing partners, suppliers, customers and other third parties. Although we take steps to secure our confidential information that is provided to third parties, such measures may not always be effective. Data breaches, losses or other unauthorized access to or releases of confidential information have in the past occurred with these third parties and material data breaches, losses or other unauthorized access to, or releases of, our confidential information may in the future occur in connection with third-party breaches that could materially adversely affect our reputation, financial condition and operating results and could result in liability or penalties under data privacy laws. In addition, we may be subject to losses of access to all or part of our systems because of our use of third-party services or software, including third-party AI services which losses may not always be the result of malicious activity, and we cannot guarantee that any such future outages will not materially impact the Company.

As of MayAugust 2,1, 2026, we had a total of $5.0 billion debt outstanding, which consisted of senior notes outstanding (the “Notes”). In addition, we may borrow up to $1.5 billion under our Revolving Credit Facility (the “2025 Revolving Credit Facility” or the “2025 Credit Agreement”). As of MayAugust 2,1, 2026, the 2025 Revolving Credit Facility was undrawn.

The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025. The 2025 Tax Act makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including domestic research cost expensing, 100% bonus depreciation and makes modifications to the U.S. International tax framework. As such, the income from all of our foreign subsidiaries continues to be subject to the U.S. tax provisions applicable to Global Intangible Low Taxed Income (“GILTI”) regime (which has been recharacterized as the Net Controlled Foreign Corporation (“CFC”) Tested Income regime, beginning in fiscal 2027). Our tax provision for the MayAugust 2,1, 2026 period includes the estimated impact of the 2025 Tax Act. Our estimates concerning the impact of this legislation remain subject to developing interpretations of the provisions of the 2025 Tax Act, which may require further adjustments and changes in our estimates, and could significantly affect our future financial results, including our earnings and cash flows.

President Biden signed into law the Inflation Reduction Act of 2022 (the “IRA”) on August 16, 2022 and the CHIPS and Science Act of 2022 on August 9, 2022. These laws implement new tax provisions and provide for various incentives and tax credits. The IRA applies to tax years beginning after December 31, 2022 and introduced a 15% alternative minimum tax for corporations whose average annual adjusted financial statement income for any consecutive three-tax-year period preceding the tax year exceeds $1 billion and a 1% excise tax on certain stock repurchases made by publicly traded U.S. corporations after December 31, 2022. As a result of the accelerated share repurchase agreement (“ASR Agreement”), the Company anticipates payingpaid $14.3 million in additional federal taxes inrelated to fiscal 2026, recorded as a reduction to stockholders’ equity, due to the 1% excise tax on net share repurchases. While we are not generally subject to significant taxes under the IRA, it is possible that in the future they could significantly affect our financial results, including our earnings and cash flows.

The Organization for Economic Cooperation and Development (the “OECD”) has been working on a Base Erosion and Profit Shifting Project, and since 2015 has been issuing guidelines and proposals with respect to various aspects of the existing framework under which our tax obligations are determined in countries in which we do business. Many countries have implemented legislation and other guidance to align their international rules with the OECD’s legal framework, including enacting a minimum tax rate of at least 15% as part of the OECD’s “Pillar Two” initiative. We are subject to legislation based on the OECD’s 15% global minimum tax regime which applies to the majority of countries in which we operate. On January 5, 2026, the OECD released a comprehensive package of administrative guidance, including the “side-by-side system” that exempts U.S. parented multinational businesses from certain provisions of Pillar Two specifically the Income Inclusion Rule and the Undertaxed Profits Rule. The OECD guidance provides that the side-by-side system will be effective for fiscal years beginning on or after January 1, 2026. We will continue to monitor countries’ laws with respect to the OECD model rules and the Pillar Two global minimum tax. In certain jurisdictions, local legislative action is needed to effectuate the “side by side system” and cannot be considered in our accounting estimate until enactment. The effects of any future legislation in this area are not yet reasonably estimable, but if such legislation is enacted in the future could have a significant effect on our provision for income taxes, our financial results, and our earnings and cash flows.

We had approximately $13.9 billion of goodwill and $2.6$2.3 billion of acquired intangible assets on our unaudited condensed consolidated balance sheets as of MayAugust 2,1, 2026. Under generally accepted accounting principles in the United States, we are required to review our intangible assets including goodwill for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

For example, a restructuring plan was initiated during the third quarter of fiscal 2025 to increase research and development investment in the data center end market and reduce the investment in new product development in other end markets including the cancellation of certain future product releases. As a result, we were required to assess the recoverability of related long-lived assets. On completion of the assessment, the Company determined the carrying values of certain long-lived assets were not recoverable. We utilized a discounted cash flow method of valuation to determine the fair value of the associated assets and liabilities compared to their carrying values, which resulted in recognition of asset impairment charges for acquired intangible assets, purchased technology licenses, and property and equipment. We recognized $711.8 million of restructuring related charges during fiscal 2025. See “Note 8 – Restructuring” in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

On September 24, 2025, we announced that our Board of Directors authorized a $5.0 billion addition to the balance of its existing stock repurchase program. Future payment of a regular quarterly cash dividend on our common stock and future stock repurchases are subject to, among other things: the best interests of the Company and our stockholders; our results of operations, cash balances and future cash requirements; financial condition; developments in ongoing litigation; statutory requirements under Delaware law; securities laws and regulations; market conditions; and other factors that our Board of Directors may deem relevant. Our dividend payments or stock repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase stock in any particular amounts or at all. A reduction in, a delay of, or elimination of our dividend payments or stock repurchases could have a negative effect on our stock price. As of MayAugust 2,1, 2026, there was $5.3$5.1 billion remaining available for future stock repurchases under the prior authorization.

Net revenue in the firstsecond quarter of fiscal 2027 was $2.4$2.7 billion and was 28%37% higher than net revenue in the firstsecond quarter of fiscal 2026. This was due to increases in sales from the data center end market by 27%,46%, and from the communications and other end market by 29%.10%. The increase was partially offset by a decrease in sales from our automotive ethernet product portfolio due to the divestiture of our automotive ethernet business at the beginning of the third quarter of fiscal 2026.

The unaudited condensed consolidated financial statements include the operating results of Celestial and XConn for the period from the dates of acquisition through our firstsecond quarter ended MayAugust 2,1, 2026. See “Note 4 – Business Combinations” and “Note 5 – Goodwill and Acquired Intangible Assets, Net” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Ultimate realization of the incentives is subject to satisfying certain minimum investment levelscriteria over the course of the incentive periodperiods and government agency reviews and audits of qualifying expenditures.activities. We cannot guarantee that we will achievemeet the agreed upon investment levelscriteria over the relevant incentive periodperiods, and any failure to meet these investment levelscriteria, or any change in the current law or government regulations may result in a clawback of some or all of the incentives and a corresponding reversal of any benefit recognized.

Capital Return Program. We remain committed to delivering stockholder value through our stock repurchase and dividend programs. Under the program authorized by our Board of Directors, we may repurchase shares of our common stock in the open market or through privately negotiated transactions. The extent to which we repurchase our stock and the timing of such repurchases will depend upon market conditions, legal rules and regulations, and other corporate considerations, as determined by our management team. During the threesix months ended MayAugust 2,1, 2026, we repurchased 1.42.5 million shares of our common stock for $200.0$400.0 million. As of MayAugust 2,1, 2026, $5.3$5.1 billion remained available for future stock repurchases. Subsequent to quarter end through May 26, 2026, we repurchased 1.1 million shares of our common stock for $200.0 million pursuant to a 10b5-1 trading plan.

We returned $253.8$507.7 million to stockholders in the threesix months ended MayAugust 2,1, 2026 through $200.0$400.0 million in repurchases of shares of our common stock and $53.8$107.7 million in cash dividends.

Cash and Short-Term Investments. Our cash and cash equivalents were $3.8$3.9 billion at MayAugust 2,1, 2026, which were $1.2$1.3 billion higher than our balance at January 31, 2026 of $2.6 billion.

Sales and Customer Composition. Our accounts receivable were concentrated with threefour customers at MayAugust 2,1, 2026, who represented a total of 75%72% of gross accounts receivable, compared with five customers at MayAugust 3,2, 2025, who represented a total of 72%73% of gross accounts receivable. Net revenue attributable to significant customers including both distributor and direct customers whose revenues represented 10% or more of total net revenue is presented in the following table:

Most of our sales are made to customers with operations located outside of the United States, primarily in Asia, and a majority of our products are manufactured outside the United States. Sales shipped to customers with operations in Asia represented approximately 83% and 74%84% of our net revenue in the three and six months ended MayAugust 2,1, 20262026, and Mayapproximately 3,76% and 75% of our net revenue in the three and six months ended August 2, 2025, respectively. Because many manufacturers and manufacturing subcontractors of our customers are located in Asia, we expect that most of our net revenue will continue to be represented by sales to our customers in that region. For risks related to our global operations, see Part II, Item 1A, “Risk Factors,” including but not limited to the risk detailed under the caption “We face additional risks due to the extent of our global operations since a majority of our products, and those of many of our customers, are manufactured and sold outside of the United States. The occurrence of any or a combination of the additional risks described below would significantly and negatively impact our business and results of operations.”

There have been no material changes during the three months ended MayAugust 2,1, 2026 to our critical accounting policies and estimates from the information provided in the “Critical Accounting Policies and Estimates” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

Three and six months ended MayAugust 2,1, 2026 and MayAugust 3,2, 2025

Our net revenue for the three months ended MayAugust 2,1, 2026 increased by $522.5$733.2 million, or 28%,37%, compared to net revenue for the three months ended MayAugust 3,2, 2025. This was primarily due to a 27%46% increase in sales from the data center end market which benefited from strong AI-related demand. Sales from the communications and other end market also increased by 29%,10%, which has continued to recover due to normalizing customer inventory levels, partially offset by a decrease in sales from our automotive ethernet product portfolio due to the divestiture of our automotive ethernet business at the beginning of the third quarter of fiscal 2026.

Cost of goods sold as a percentage of net revenue decreased for the three and six months ended MayAugust 2,1, 20262026, compared to the three and six months ended MayAugust 3,2, 2025, which was primarily due to better cost absorption driven by higher revenues,revenues partiallyand offset by a shift inbetter product mix. As a result, gross margin for the three and six months ended MayAugust 2,1, 20262026, increased by 1.82.7 and 2.4 percentage points, respectively compared to the three and six months ended MayAugust 3,2, 2025.

Research and development expense increased by $144.6$222.1 million in the three months ended MayAugust 2,1, 2026 compared to the three months ended MayAugust 3,2, 2025. The increase was primarily due to higher overall spending to support our R&D initiatives, including increased employee compensation and related costs, primarily driven by growth in headcount including the addition of new employees from our recent acquisitions. The increase is also due to higher acquisition related costs of $22.3 million.

Selling, general and administrative expense increased by $72.0$64.8 million in the three months ended MayAugust 2,1, 2026 compared to the three months ended MayAugust 3,2, 2025. The increase was primarily due to higher acquisition related costs of $42.6 million, as well as an increase in employee compensation and related costs, primarily driven by increased headcount including the addition of new employees from our recent acquisitions.costs.

We recognized net restructuring related chargesgain of $10.7$2.8 million in the three months ended MayAugust 2,1, 2026 and net restructuring related charges of $7.9 million in the six months ended August 1, 2026 as we continued to evaluate our existing operations to increase operational efficiency, decrease costs and increase profitability. See “Note 8 – Restructuring” in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

Interest and other loss, net increased by $201.4$25.0 million in the three months ended MayAugust 2,1, 2026 compared to the three months ended MayAugust 3,2, 2025. The increase was primarily due to a $331.8$101.9 million increase in fair value of the contingent consideration liability associated with the Celestial acquisition, partially offset by an unrealized gain of $81.1$49.9 million from the forward stock purchase contract and higher netinterest unrealized gains from equity investmentsincome in the three months ended MayAugust 2,1, 2026.

Our income tax expense for the three months ended MayAugust 2,1, 2026 was $48.8$70.3 million compared to a tax expense of $38.0$38.9 million for the three months ended MayAugust 3,2, 2025. TheseThe amountsincrease differedin our tax provision was primarily driven by an increase in our pre-tax earnings. Our estimated effective tax rate for the year differs from the U.S. federal statutory tax rate of 21%,21% primarily due to a substantial portion of our earnings or losses being taxed or benefited at rates lower than the U.S. statutory rate, net of the impact of U.S. taxation of foreign operations, benefits from tax credits, non-deductible adjustments to contingent consideration liability, (net of the tax impacts of our forward stock purchase contract), valuation allowance releases,releases andas well as discrete tax benefits and expenses for excess deductions and deficiencies on stock-based compensation. Income tax expense for the three months ended May 2, 2026 also differs from the U.S. statutory rate of 21% due to non-deductible adjustments to contingent consideration liability, net of the tax impacts of our forward stock purchase contract. The recorded tax expense is based on year-to-date pre-tax results, forecasted pre-tax results, forecasted annual tax expense and discrete adjustments for the respective periods.

The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025. The 2025 Tax Act makes permanent key elements of the 2017 Tax Cuts and Jobs Act and modifies certain provisions of the U.S. International tax framework. Certain provisions of the 2025 Tax Act becomebecame effective in fiscal year 2027. Our tax provision for the MayAugust 2,1, 2026 period includes the impact of the 2025 Tax Act. We will continue to evaluate the impact of the 2025 Tax Act on our income taxes.

We are subject to legislation based on the Organization for Economic Cooperation and Development’s 15% global minimum tax regime which applies to the majority of countries in which we operate. As a result of this legislation, our foreign earnings are generally subject to a minimum tax rate of 15%. On January 5, 2026, the OECD released a comprehensive package of administrative guidance, including the “side-by-side system” that exempts U.S. parented multinational businesses from certain provisions of Pillar Two, specifically the Income Inclusion Rule and the Undertaxed Profits Rule. The OECD guidance provides that the side-by-side system will be effective for fiscal years beginning on or after January 1, 2026. In certain jurisdictions, local legislative action is needed to effectuate the “side by side system” and cannot be considered in our accounting estimate until enactment. The effects of any future legislation in this area are not yet reasonably estimable, but if such legislation is enacted in the future could have a significant effect on our provision for income taxes, our financial results, and our earnings and cash flows.

Our principal source of liquidity as of MayAugust 2,1, 2026 consisted of approximately $3.8$3.9 billion of cash and cash equivalents, of which approximately $1.6$1.7 billion was held by subsidiaries outside of the United States, a portion of which are deemed to be indefinitely reinvested. We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States.

As of MayAugust 2,1, 2026, we had total borrowings outstanding of $5.0 billion, consisting of senior notes outstanding.

We have a revolving credit facility with a borrowing capacity of up to $1.5 billion and a 5-year term (“2025 Revolving Credit Facility”). As of MayAugust 2,1, 2026, the 2025 Revolving Credit Facility was undrawn and is available for draw down through June 30, 2030.

Subsequent to quarter end, we entered into agreements to secure long-term wafer and substrate manufacturing capacity, in which we committed to pay deposits totaling $870.0 million, payable in quarterly installments from the second quarter of fiscal 2027 through the second quarter of fiscal 2028. For a description of our contractual obligations including debt and purchase commitments, see “Note 7 – Debt,” and “Note 9 – Commitments and Contingencies” in the Notes to Unaudited Condensed Consolidated Financial Statements. We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities.

We may elect to factor trade accounts receivable from time to time as part of our overall liquidity and working capital management strategy. During the three and six months ended MayAugust 2,1, 2026, we generated cash from operations from the sale of certain trade accounts receivable on a non-recourse basis to a third-party financial institution pursuant to a factoring arrangement. See “Note 14 – Supplemental Financial Information” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Net cash provided by operating activities for the threesix months ended MayAugust 3,1, 20252026 was $332.9$1.2 million.billion. We had a net income of $177.9$342.5 million adjusted for the following non-cash items: stock-based compensation expense of $533.8 million, amortization of acquired intangible assets of $245.7$440.1 million, stock-basedchange compensationin expensefair value of $142.1contingent consideration liability of $433.7 million, depreciation and amortization of $84.2$188.5 million, restructuringunrealized relatedgain gainson forward stock purchase contract of $14.0$131.0 million, deferred income tax benefit of $4.3$38.7 million, and $44.1$58.3 million of net loss from other non-cash items. Cash outflow from working capital of $342.8$660.3 million for the threesix months ended MayAugust 3,1, 20252026 was primarily driven by an increases in prepaid expenses and other assets, and a decrease in accrued employee compensation, and increases in accounts receivable and inventories. The decrease in accrued employee compensation was due to bonus payout of our annual employee bonus plan.payable. The increase in accountsprepaid receivableexpenses and other assets was primarily due to higherpayments salesmade andfor lowercapacity distributionfees. salesThe reserves, partially offset by higher factored receivables. Inventories grew sequentiallydecrease in supportaccounts payable is due to the timing of expected revenue growth.payments.

For the threesix months ended MayAugust 2,1, 2026, net cash used in investing activities of $1.4$1.6 billion was primarily driven by acquisitions, net of cash acquired of $1.3 billion, and purchases of property and equipment of $155.7$282.4 million.

For the threesix months ended MayAugust 3,2, 2025, net cash used in investing activities of $94.1$171.3 million was primarily driven by purchases of property and equipment of $118.8$166.3 million, partially offset by proceeds from sales of property and equipment of $25.9$27.3 million.

For the threesix months ended MayAugust 2,1, 2026, net cash provided by financing activities of $2.0$1.6 billion was primarily attributable to $2.0 billion proceeds from issuance of preferred stock, and $1.0 billion proceeds from borrowings, partially offset by $500.0 million repayment of debt principal, $227.2$400.0 million repurchases of common stock, $365.2 million for tax withholding payments on behalf of employees for net share settlements, $200.0 million repurchases of common stock, $53.8$107.7 million for payment of our quarterly dividends, and $27.2$56.6 million payments on technology license obligations.

For the threesix months ended MayAugust 3,2, 2025, net cash used in financing activities of $301.2$347.1 million was primarily attributable to $340.0$790.6 million repayment of debt principal, $540.0 million repurchases of common stock, $51.8$103.5 million for payment of our quarterly dividends, $50.2$100.9 million for tax withholding payments on behalf of employees for net share settlements, $32.8 million repayment of debt principal, and $26.8$54.3 million payments on technology license obligations, partially offset by $200.0$1.2 millionbillion proceeds from borrowings.borrowings, and $51.1 million in proceeds from the issuance of common stock under our employee stock plans.