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

Our future results may fluctuate, fail to match past performance or fail to meet expectations as a result of conditions beyond our control, such as general economic conditions in the markets we compete, conditions unique to our industry and the financial health and viability of our suppliers and customers, which may cause our may cause our stock price to be volatile.

Our results may fluctuate in the future, may fail to match our past performance or fail to meet our expectations and the expectations of analysts and investors as a result of conditions beyond our control which may trigger volatile changes in our stock price. Our results and related ratios, such as gross margin, operating income percentage and effective tax rate may fluctuate for a variety of reasons beyond our control, including: general economic conditions in the countries where we sell our products, including recessionseconomic slowdowns, recessions, persistent or inflationaryvolatile pressuresinflation, elevated interest rates and changes in monetary policy; financial market instability or disruptions to the banking systemor duecredit tomarkets, bankincluding failures,as a result of monetary tightening, reduced liquidity or other stress affecting financial institutions; geopolitical turmoil, such as the conflicts in the Middle East and between Russia and Ukraine and any sanctions, export controls or other retaliatory actions against, or restrictions on doing business with Russia, as well as any resulting disruption, instability or volatility in the global markets and industries resulting from such conflict; the availability of adequate supply commitments from our outside suppliers; the timing of new product introductions by us, our customers and our competitors; seasonality and variability in the computer market and our other end markets; product obsolescence; the scheduling, rescheduling or cancellation of orders by our customers; the cyclical nature of demand for our customers’ products; our ability to predict and meet evolving industry standards and consumer preferences; our ability to develop new process technologies and achieve volume production; changes in manufacturing yields; capacity utilization; product mix and pricing; movements in exchange rates, interest rates or tax ratesrates, which may be exacerbated by divergent inflation trends and monetary policies across regions; our ability to integrate and realize synergies from acquisitions; the manufacturing and delivery capabilities of our subcontractors; and litigation and regulatory matters. Securities class action litigation has often been brought against companies following periods of volatility in the market price of their securities or substantial declines following a company’s failure to meet guidance or estimates. ForWe example,and wecertain areof currentlyour subjectdirectors toand threeofficers putativehave previously been named as defendants in securities class action complaintsand relatingderivative lawsuits alleging violations of federal securities laws. For more information, see the section entitled "Legal Matters" in Note 13, Commitments and Contingencies, to aour dropConsolidated Financial Statements included in our stock price and could become involved in additional litigation of this typeAnnual in the future if our stock price is volatile for any reason.Report.

TheDuring industry downturns, the cyclical nature of the industry we operate in may limit our ability to maintain or increase net sales and operating results during industry downturns.results.

The semiconductor industry has experienced significant downturns, often in connection with, or in anticipation of, maturing product cycles of both semiconductor companies’ and their customers’ products or a decline in general economic conditions. The severity, timing and duration of these downturns may be exacerbated by broader macroeconomic conditions, including inflationary pressures, elevated interest rates, reduced capital spending and geopolitical uncertainty. The cyclical nature of the semiconductor industry may cause us to experience substantial period-to-period fluctuations in our operating results and may adversely affect our results of operations and the value of our business.

Our continuing business depends in significant part upon the current and anticipated market demand for our products and services. As a supplier to the semiconductor industry, we are subject to the business cycles that characterize the industry. The timing, length and volatility of these cycles are difficult to predict. The semiconductor industry has historically been cyclical due to sudden changes in demand, the amount of manufacturing capacity and changes in the technology employed in semiconductors. These cycles may become more volatile or prolonged due to rapid changes in end-market demand, shortened product lifecycles and faster technology transitions. The rate of changes in demand, including end demand, is high, and the effect of these changes upon us occurs quickly, exacerbating the volatility of these cycles. These changes have affected the timing and amounts of customers’ purchases and investments in new technology. These industry cycles create pressure on our revenue, gross margin and net income.

The semiconductor industry has in the past experienced, and may continue to experience, periods of oversupply which has resulted in significantly reduced prices for semiconductor devices and components, including our products, both as a result of general economic changes and overcapacity. Periods of apparent oversupply may also result from imbalances between customer or channel inventory levels and actual end demand, including following periods of accelerated or uneven ordering. Oversupply causes greater price competition and can cause our revenue, gross margins and net income to decline. During periods of weak demand, customers typically reduce purchases, delay delivery of products and/or cancel orders for our products. Order cancellations, reductions in order size or delays in orders could occur and would materially adversely affect our business and results of operations. Actions to reduce our costs may be insufficient to align our structure with prevailing business conditions. Certain of our costs are fixed or semi-fixed and may not be reduced as quickly as demand declines. We may be required to undertake additional cost-cutting measures and may be unable to invest in marketing, research and development and engineering at the levels we believe are necessary to maintain our competitive position. If industry downturns are prolonged or more severe than anticipated, reductions in these investments, even if appropriate in the short term, could impair our ability to compete effectively over the long term. Our failure to make these investments could seriously harm our business.

As is typical in the semiconductor and IoT industries, the average selling price of particular products have historically declined significantly over the life of the product. In the past, we have reduced the average selling prices of our products in anticipation of future competitive pricing pressures, new product introductions by us or our competitors and other factors. Pricing pressures may be further intensified during periods of weak or uncertain macroeconomic conditions, uneven end-market demand or customer inventory corrections, as customers seek price concessions. We expect that we will have to similarly reduce prices in the future for older generations of products. Competitive pricing pressure may increase during industry downturns or periods of oversupply. Reductions in our average selling prices to one customer could also impact our average selling prices to all customers. A decline in average selling prices would harm our gross margins for a particular product. If not offset by sales of other products with higher gross margins, our overall gross margins may be adversely affected. Our business, results of operations, financial condition and prospects will suffer if we are unable to offset any reductions in our average selling prices by increasing our sales volumes, reducing our costs and/or developing new or enhanced products with higher selling prices or gross margins on a timely basis.

A prolonged failure to maintain significant U.S. government operations, particularly those pertaining to our business, could have a material adverse effect on our revenues, earnings and cash flows. Disruptions or uncertainty related to U.S. government funding and operations may recur unpredictably and persist for extended periods. Continued uncertainty related to recent and future U.S. federal government shutdowns, breach of the U.S. debt ceiling, the U.S. budget and/or failure of the U.S. federal government to enact annual appropriations, suchincluding asreliance long-term funding under aon continuing resolution,resolutions, could have a material adverse effect on our revenues, earnings and cash flows. Additionally, disruptions in U.S. government operations may negatively impact regulatory approvals and guidance that are important to our operations.operations and may contribute to broader economic or market uncertainty affecting our customers and end markets.

Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to market-wide liquidity problems. For example, onin Marchrecent 10,years, 2023,the Siliconfailure Valleyor Bankdistress ("SVB"),of Signaturecertain Bankfinancial institutions due to liquidity concerns has led to significant volatility and Silvergatedisruption Capitalin Corp.the werebanking each swept into receivership.system.

Although weWe assess our banking relationships as we believe necessary or appropriate, but our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

Our reliance on a limited number of subcontractors and suppliers for wafers, chipsets and other electronic components, packaging, testing and certain other processes involves several risks, including potential inability to obtain an adequate supply of required components and reduced control over the price, timely delivery, reliability and quality of components. These risks are attributable to several factors, including limitations on resources, persistent inflationary pressures, labor problems, equipment failures or the occurrence of natural disasters. The good working relationships we have established with our suppliers and subcontractors could be disrupted, and our supply chain could suffer, if a supplier or subcontractor were to experience a change in control. In addition, the impact of general economic conditions, including recessions or inflationary pressures, bank failures and uncertainty in the banking system, geopolitical turmoil and supply chain disruptions, as well as geopolitical tensions, trade restrictions, export controls, tariffs, sanctions and other government actions affecting global trade, could adversely impact our suppliers and third-party subcontractors, and we may be unable to prevent or mitigate the effect of these conditions on our suppliers or find alternate sources of supply, which may impact our operations. Disruption or termination of our supply sources or subcontractors could significantly delay our shipments to customers, which could damage relationships with current and prospective customers and harm our business. Any prolonged inability to obtain timely deliveries or quality manufacturing or any other circumstances that would require us to seek alternative sources of supply or to manufacture or package certain components internally could limit our growth and harm our business. Certain of our products rely on rare earth elements for their manufacturing, of which a significant majority are sourced from China. Any disruption in the supply of these elements could adversely affect our ability to produce and deliver our products.

Many of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers and contract manufacturers that manufacture our modules and routers, are located in geographies outside the U.S. including China, Israel, Japan, Taiwan and Vietnam. WhileWe have been diversifying our utilizationsupplier ofbase by qualifying additional suppliers and utilizing multiple third-party foundries and manufacturersmanufacturers, does create some redundancy,but any interruption of supply by one or more of these foundries or manufacturers could materially impact us.

A majority of our package and test operations are performed by third-party contractors based in theChina, U.S.,Malaysia, ChinaTaiwan and Taiwan.Vietnam. Our international business activities, in general, are subject to a variety of potential risks resulting from political and economic uncertainties, including rising tensions between the U.S. and China. Any political turmoil or trade restrictions in these countries, particularly China, could limit our ability to obtain goods and services from these suppliers and subcontractors. Additionally, the geopolitical developments in relations between Taiwan and China could affect the supply of our products from Taiwan. Such developments could include restriction on the export of products from Taiwan to ChinaChina, disruptions to manufacturing, shipping and logistics, and/or restrictions on the import of Taiwanese-origin products into China. The effect of an economic crisis or political turmoil impacting our suppliers located in these countries may impact our ability to meet the demands of our customers. A public health crisis or anyAny further political developments or health concerns in markets in which our third-party contractors and suppliers are based could result in social, economic and labor instability, adversely affecting the supply of our products and, in turn, our business, financial condition and results of operations. If we find it necessary to transition the goods and services received from our existing suppliers or subcontractors to other firms, we would likely experience an increase in production costs, including additional costs on supply transitions, and a delay in production associated with such a transition, both of which could have a significant negative effect on our operating results, as these risks are substantially uninsured.

Although weWe provide our suppliers with rolling forecasts of our production requirements, but their ability to provide products to us is limited by their available capacity. This lack of capacity has at times constrained our product sales and revenue growth and may do so again in the future. In addition, an increased need for capacity to meet internal demands or demands of other customers could cause our suppliers to reduce capacity available to us. Our suppliers may also require us to pay amounts in excess of contracted or anticipated amounts for product deliveries or require us to make other concessions in order to acquire the supplies necessary to meet our customer requirements. If our suppliers extend lead times, limit supplies or the manufacturing capacity we require, or increase prices due to capacity constraints or other factors, we may, in turn, have to increase the prices of our products in order to remain profitable, and our customers may reduce their purchase levels with us and/or seek alternative solutions to meet their demand. If any of the foregoing occurs, our revenue and gross margin may materially decline, which could materially and adversely impact our business and results of operations. Delays in increasing third-party manufacturing capacity may also limit our ability to meet customer demand.

Our general warranty policy for products provides for repair or replacement of defective parts. In some cases, a refund of the purchase price is offered. Our standard terms for our service offerings also limit our liability, and in some cases specify the remedies the customer is entitled to receive if the services fail to meet applicable service level objectives. However, in certain instances, we have agreed to other terms, including some indemnification provisions, which could prove to be significantly more costly than our standard remedies. We attempt to limit our liability through our standard terms and conditions and negotiation of sale and other customer contracts, but such limitations may not be accepted or effective. While weWe maintain some insurance for such events, but a successful warranty or product liability claim against us in excess of our available insurance coverage, if any, and established reserves, or a requirement that we participate in a product recall, would have adverse effects (that could be material) on our business, operating results and financial condition. Additionally, in the event that our products or services fail to perform as expected, our reputation may be damaged, which could make it more difficult for us to sell our products and services to existing and prospective customers and could adversely affect our business, operating results and financial condition.

Certain of our products and wireless connectivity services can only be used over wireless data networks operated by third parties. Our business and future growth will depend, in part, on the successful deployment by mobile network operators of next generationnext-generation wireless data networks and appropriate pricing of wireless data services. We also depend on successful strategic relationships with our mobile network operator partners to provide direct or indirect roaming services onto their networks and our operating results and financial condition could be harmed if they increase the price of their services or experience operational issues with their networks. In certain cases, our mobile network operator partners may also offer services that compete with our IoT services business.

We operate in a dynamic environment characterized by price erosion, rapid technological change, and design and other technological obsolescence. For example, the artificial intelligence ("AI") market is subject to rapid technological change, product obsolescence, frequent new product introductions and feature enhancements, changes in end-user requirements and evolving industry trends and legal standards. Our competitiveness and future success depend on our ability to predict and adapt to these changes in a timely and cost-effective manner by designing, developing, manufacturing, marketing and providing support for our own new products and technologies. A failure to achieve design wins, to introduce these new products in a timely manner, or to achieve market acceptance for these products on commercially reasonable terms could harm our business.

Many of our products are based on industry standards that are continually evolving. Our ability to compete in the future will depend in part on our ability to anticipate, identify and ensure compatibility or compliance with these evolving industry standards. The emergence of new industry standards could render our products incompatible with products developed by our customers and potential customers. As a result, we could be required to invest significant time and effort and to incur significant expense to redesign our products to ensure compliance with relevant standards. Even if our products ultimately achieve compliance, delays in anticipating or responding to evolving standards could cause us to miss critical design windows or customer adoption cycles. If our products are not in compliance with prevailing industry standards or requirements, we could miss opportunities to achieve crucial design wins which in turn could have a material adverse effect on our business, operating results and financial conditions.

Markets for 5G infrastructure may not develop in the manner or in the time periods we anticipate. Deployment of 5G infrastructure may be slower, more uneven or more regionally fragmented than expected and may be subject to pauses, scaling back or reprioritization by carriers. If domestic and global economic conditions worsen, overall spending on 5G infrastructure may be reduced, which would adversely impact demand for our products in these markets. In addition, as regulatory and private sector stakeholders have expressed concerns about the negative effects and dangers posed to others by the deployment of 5G technology, unfavorable developments with evolving laws and regulations worldwide related to 5G or 5G suppliers may limit global adoption, impede our strategy, and negatively impact our long-term expectations in this area. Regulatory, trade, national security or industrial policy measures, including export controls or restrictions affecting network equipment suppliers, could further disrupt or reshape global 5G deployment. Even if the 5G infrastructure market develops in the manner or in the time periods we anticipate, if we do not have timely, competitively priced, market-accepted products available to meet our customers’ planned roll-out of 5G wireless communication systems, 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 5G are not yet fully developed, demand for these products may be unpredictable and may vary significantly from one period to another.

While weWe intend to continue to invest in research and development, including the integration and use of artificialAI, intelligence,but we may be unable to make the substantial investments that are required to remain competitive in our business.

As a global company headquartered in the U.S., we are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons, including, in certain cases, dealings with or between our U.S. employees and subsidiaries. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services and technologies, and in other circumstances we may be required to obtain an export license or other authorization before entering into a transaction or transferring a controlled item. We maintain an economics sanction and export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. These restrictions and laws have significantly restricted our operations in the recent past and may continue to do so in the future. We must also comply with export restrictions and laws imposed by other countries affecting trade and investments.investments, and recent regulatory volatility has increased the complexity and cost of compliance with our export control program requirements, including the need to satisfy additional customer-specific requirements.

In fiscal year 2025, sales to customers in China comprised 43% of our net sales. The continuing economic slowdown in China could adversely affect our sales to customers in China and consequently, our business, operating results and financial condition. In addition, there are risks that the Chinese government may, among other things, require the use of local suppliers, impose or propose new or higher tariffs on U.S. products, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, operating results and financial condition. Chinese customers may also increasingly prefer or be encouraged to purchase products from domestic suppliers due to regulatory requirements, government incentives, perceived political risk or long-term industrial policy objectives, even in the absence of formal restrictions on our products. Further, changes in U.S. and global social, political, regulatory and economic conditions or in laws and policies governing trade with China as a result of rising tensions could adversely affect our business.

The Chinese government and provincial and local governments have provided, and continue to provide, various incentives to encourage the development of the semiconductor industry in China. Such incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to our manufacturing partners and to us with respect to our facilities in China. Any of these incentives could be reduced or eliminated by governmental authorities at any time. In addition, incentives or preferential treatment provided to local or government-backed competitors, even if not reduced or eliminated for us or our manufacturing partners, could place us at a competitive disadvantage, distort pricing dynamics or accelerate substitution away from foreign suppliers. Any such reduction or elimination of incentives currently provided to us and our manufacturing partners or increased competitive pressure resulting from incentives provided to others could adversely affect our business and operating results.

As a global enterprise, we face exposure to adverse movements in foreign currency exchange rates. Certain of our assets, including certain bank accounts, exist in non-U.S. dollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations. The non-U.S. dollar-denominated currencies are principally the SwissAustralian franc, euro,Dollar, Canadian dollar,Dollar, Mexican peso, Japanese yen,euro, Great British poundPound, Indian Rupee, Mexican Peso, Swiss Franc and AustralianTaiwan dollar.Dollar. We also have a significant number of employees that are paid in foreign currency, including those based in Australia, Canada, France, India, Mexico, Switzerland, Taiwan, and United Kingdom.

If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises. Whereas if the value of the U.S. dollar strengthens relative to these specific currencies, it could make the pricing of our products less competitive and affect demand for our products. With the growth of our international business, our foreign currency exposures may grow and, under certain circumstances, could harm our business. As a means of managing our foreign exchange exposure, we routinely convert U.S. dollars into foreign currency in advance of the expected payment.payment and have entered into a limited foreign currency hedging program. We regularly assess whether or not to hedgeour foreign exchange exposure.hedging program based on estimated exposure and costs, but we are exposed to foreign currency risk that could have a negative impact on our financial results.

With the enactment of the Tax Cuts and Jobs Act ("Tax Act"), all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, we have determined that none of our current foreign earnings will be permanently reinvested. On July 4, 2025, the One Big Beautiful Bill Act ("the OB3") was signed into law, which makes permanent many provisions of the Tax Act, and also introduces additional changes affecting individuals and businesses, including an increased tax rate on current foreign earnings. If we needed to remit all or a portion of our historical undistributed earnings to the U.S. for investment in our domestic operations, any such remittance could result in increased tax liabilities and a higher effective tax rate. Determination of the amount of the unrecognized deferred tax liability on these unremitted earnings is not practicable.

Changes in government trade policies, including the imposition of new or higher tariffs,tariffs or additional export controls or licensing requirements, could have an adverse impact on our business or the business of our customers, which may materially adversely affect our business operations, sales or gross margins.

The U.S. government has made statements and taken certain actions that have led to, and may lead to, further changes to U.S. and international trade policies, including the imposition of new or higher tariffs affecting certain products exported by a number of U.S. trading partners, including Canada, China, the European Union, and Mexico. Changes in trade and technology policies, particularly those affecting semiconductors and advanced technologies, are increasingly driven by national security, industrial policy and supply-chain resilience objectives and may be structural, long-term and subject to further expansion. In response, many U.S. trading partners, including Canada, China, the European Union, and Mexico have imposed or proposed new or higher tariffs on U.S. products. The tariffs imposed by the U.S. on products imported from China include parts and materials used in semiconductor manufacturing and could have the effect of increasing the cost of materials we use to manufacture certain products, which could result in lower margins. TheIn addition to tariffs, the U.S. government has alsoimplemented takenexport actionscontrols, licensing requirements and other restrictions targeting exportsthe export of certain technologies, including technologies tothat Chinamay whichbe incorporated into or enable our products. These actions could lead to additional restrictions on theour ability to sell products to certain customers or regions, increase compliance and administrative costs, or create uncertainty regarding product design, sourcing or customer commitments. Similar trade or technology restrictions may be adopted by other governments, such as China's export ofcontrols productson thatrare includeearth orminerals, enableresulting certainin technologies,a includingmore productsfragmented weglobal providetrade to China-based customers.environment. In addition, the geopolitical headwinds driven by export restrictionstrade and technology restrictions, tariffs and retaliatory measures imposed by thegovernments U.S. governmentglobally may weaken demand for our products.

The state, federal and international regulations and listing exchange standards, including those promulgated by the SEC and The Nasdaq Stock Market LLC ("Nasdaq"), have been revised, and may in the future continue to be revised. These developments have increased, and may continue to increase, our legal compliance and financial reporting costs. For example, in March 2024, the SEC adopted a rule requiring registrants to include certain climate-related disclosures in registration statements and annual reports. While theThe SEC's climate-related disclosure rules are currently stayed pending completion of judicial review, but certain international and state regulations regarding climate-related disclosure continue in force. Currently, the ultimate impact of these laws on our business is uncertain and may result in increased costs, risk of litigation, reputational harm or other harm with customers, regulators, investors or other stakeholders.

We could also be adversely affected if legislation or regulations are expanded to require changes in our products, services or business practices, if governmental authorities in the jurisdictions in which we do business interpret or implement their legislation or regulations in ways that negatively affect our business or if end users or others allege that their personal information was misappropriated, for example, because of a defect or vulnerability in our products or services or if we experience a data breach. U.S. policymakers and regulators are also increasingly focused on the safe and trustworthy use of AI, with growing state-level adoption of AI-specific legislation, including in states such as Colorado, Utah and California. These developments may require changes to our business practices and increased compliance costs. If we are required to allocate significant resources to modify our products, services or our existing security procedures for the personal information that our products and services process, our business, results of operations and financial condition may be adversely affected.

Certain of our customers and suppliers require us to agree to comply with their codes of conduct, which may include detailed provisions on labor, human rights, health and safety, environment, corporate ethics and management systems. Certain of these provisions are not requirements under the laws of the countries in which we operate and may be burdensome to comply with on a regular basis. Moreover, new provisions may be added or material changes may be made to any these codes of conduct, and we may have to promptly implement such new provisions or changes, which may substantially further increase the cost of our business, be burdensome to implement and/or adversely affect our operational efficiencies and operating results. If we violate any such codes of conduct, we may lose further business with the customer or supplier and, in addition, we may be subject to fines from the customer or supplier. While weWe believe that we are currently in material compliance with our customers and suppliers’ codes of conduct, but any one of our customers and suppliers could audit our compliance with such code of conduct and determine otherwise. A loss of business from these customers or suppliers could have a material adverse effect on our business, operating results and financial condition.

Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in applicable tax laws or their interpretation. Most recently, the OB3 was enacted, which makes permanent many provisions of the Tax Act and also introduces additional changes affecting individuals and businesses, including an increased tax rate on current foreign earnings that could increase our effective tax rate. Additional legislative proposals and enacted measures, including those included in the OB3, may further alter U.S. tax policy. Such changes could include, among other things, adjustments to corporate tax rates, limitations on certain deductions, changes to the taxation of cross-border activities or revisions to tax credits or other incentives. The OB3 did not have a significant impact on our fiscal year 2026 Consolidated Financial Statements, but the impact of the OB3 will likely be subject to ongoing technical guidance and accounting interpretation by the current presidential administration, which we will continue to monitor and assess, and we will continue to evaluate its potential impact on our future consolidated financial statements. We cannot predict whether, when, or to what extent future tax legislation, including further amendments or guidance related to the OB3, will be enacted or how such changes will be applied to our business. Any such changes could materially and adversely affect our business, financial condition and results of operations. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service of the U.S. ("IRS") and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. We cannot predict the outcome of these examinations. If our effective tax rates were to increase, particularly in the U.S., Canada or Switzerland, or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected. See the risk factor captioned "We may be subject to increased tax liabilities and an increased effective tax rate if we need to remit funds held by our subsidiaries outside the U.S." above.

In addition, although the Creating Helpful Incentives to Produce Semiconductors and Science Act ("CHIPS Act") provides various incentives and tax credits to U.S. companies in connection with semiconductor manufacturing, but we may be unsuccessful (including, relative to the efforts of our competitors) in any efforts to obtain such incentives and tax credits.

Furthermore, new climate change laws and regulations could require us to change our manufacturing processes or procure substitute raw materials that may cost more or be more difficult to procure. Various jurisdictions in which we do business have implemented, or in the future could implement or amend, restrictions on emissions of carbon dioxide or other greenhouse gases ("GHG"), limitations or restrictions on water use, regulations on energy management and waste management, and other climate change-based rules and regulations, which may increase our expenses and adversely affect our operating results. Continuing political and social attention to the issue of sustainability has also resulted in new regulations requiring disclosure of extensive information on climate-related matters and other sustainability topics. The State of California recently passedenacted the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, subject to minimum revenue requirements, starting in 2026. Based on our net sales for fiscal year 2025,2026, we expect that we will initially be subject onlyto toboth the Climate Corporate Data Accountability Act, which will require an initial Scope 1 and 2 GHG emissions report by August 10, 2026, and the Climate-Related Financial Risk Act, which will require biennial reporting of climate-related financial risks. These laws are currently subject to litigation, which may affect timing or enforcement. Finally, in March 2024, the SEC finalized a new disclosure rule that will require certain climate-related disclosures, including Scope 1 and 2 GHG emissions, climate-related targets and goals and certain climate-related financial statement metrics, with phase-in compliance beginning in 2026. Although currently stayed pending completion of judicial review, we are assessing our obligations under similar regulations promulgated internationally and by certain states, and expect that compliance could require substantial effort in the future. Enhanced disclosure on climate-related and other sustainability topics could lead to reputational or other harm with customers, regulators, investors or other stakeholders and could also increase our litigation risks relating to statements alleged to have been made by us or others in our industry regarding climate change risks, or in connection with any future disclosures we may make regarding reported emissions, particularly given the inherent uncertainties and estimations with respect to calculating GHG emissions. We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations may adversely affect our business and results of operations.

Our success and growth depend to a significant degree on the skills and continued services of our management team and other key personnel. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement, and we may incur additional expenses to recruit and train a replacement. We have experienced recent changes in our management team. While weWe seek to manage these transitions carefully, but these changes may result in a loss of institutional knowledge and may cause disruptions to our business and growth. If we fail to successfully integrate new key personnel into our organization or if key employees are unable to successfully transition into new roles, our business could be adversely affected. We may not be able to retain our executive officers or key employees in the future. Additionally, lack of effective leadership may lead to low morale, higher turnover, and decreased ability to execute our strategy. The loss of the services of any of our executive officers or key employees, and any failure to have in place and execute an effective succession plan for executive officers or key employees, could disrupt our business and have a significant negative impact on our operating results, prospects and future growth.

However,In asaddition, our future success depends upon our ability to attract and retain highly qualified technical, marketing and managerial personnel. We are dependent on a relatively small group of key technical personnel with relevant expertise, including analog and mixed-signal expertise. Personnel with highly skilled managerial capabilities, and relevant expertise, are scarce and competition for personnel with these skills is intense. As of fiscal year 2026, we operate under a hybrid work model, which requires greater in-office attendance for certain employees while still allowing flexibility for remote work. As a result of our returnwork to office planmodel or as a result of any further changes to return to work policies or transitions away from remote or hybrid work, we may experience employee turnover, difficulty hiring new employees or low employee engagement. In addition, continuing macroeconomic related uncertainty may result in significant psychological, emotional or financial burdens for some of our employees, which may impact their productivity and morale and may lead to higher employee absences and higher attrition rates. We may not be able to retain key employees and we may not be successful in attracting, integrating or retaining other highly qualified personnel in the future. If we are unable to retain the services of key employees or are unsuccessful in attracting new highly qualified employees, our business could be harmed.

We have encountered and expect to continue encountering difficulties that have adversely impacted, and likely will continue to adversely impact, our ability to realize the anticipated benefits from the Sierra Wireless Acquisition, and our significant additional indebtedness that we incurred in connection with the acquisition has negative consequences.Acquisition.

Following the Sierra Wireless Acquisition, we experienced reduced business levels in the business acquired from Sierra Wireless due to current macroeconomic and industry conditions, including elevated interest rates. If business conditions related to the Sierra Wireless business do not improve, we may never realize some or any of the benefits we anticipated from the Sierra Wireless Acquisition, including operational synergies, sustained revenue growth and earnings accretion, and we may be required to record additional impairments of our goodwill allocated to this business. Events outside our control, including economic trends and changes in regulation and laws, also could adversely affect our ability to realize the expected benefits from the Sierra Wireless Acquisition.

As a result of the Sierra Wireless Acquisition, the amount of our debt increased substantially, resulting in additional interest expense. In the fourth quarter of fiscal year 2023, we borrowed term loans in an aggregate principal amount of $895.0 million under the Term Loan Facility in order to fund a portion of the consideration for the Sierra Wireless Acquisition and related fees and expenses. We have since repaid a significant portion of this debt. Our increased indebtedness as a result of this financing has had, and likelymay willhave continuein tothe have,future, important consequences to us and our stockholders, including: increasing our vulnerability to general adverse economic and industry conditions; limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements; with respect to variable rate indebtedness, risks associated with increases in interest rates; requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, future acquisitions, capital expenditures, stock repurchases and general corporate requirements; limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and putting us at a disadvantage compared to our competitors with less indebtedness. See "Item 1A. Risk Factors - Risks Relating to Our Indebtedness - Covenants in the Credit Agreement (as defined below) may restrict our ability to pursue our business strategies and any violation of one or more of the covenants could have a material adverse effect on our financial condition and results of operations," below for further discussion on the impact of our increased indebtedness.

We are also continuing to integrate certain remaining business, operational and administrative systems related to the Sierra Wireless business, which is a complex, costly and time-consuming process. We have encountered and expect to continue to encounter difficulties integrating ours and Sierra Wireless’s businesses and operations, which has adversely impacted and delayed the operational synergies we expected to realize as a result of the acquisition. Our integration of certain business processes related to the Sierra Wireless business has also resulted in material weaknesses in our internal control over financial reporting as further described in Part II, Item 9A, "Controls and Procedures." See "Risks Relating to Compliance" below. It is not certain that we will be successful in integrating Sierra Wireless’ business with our business. Risks related to our ability to successfully complete the integration of the Sierra Wireless business and realize the benefits we anticipated from the Sierra Wireless Acquisition include, but are not limited to the following:

•difficulties in the assimilation of employees and culture and the impact on the business from the loss of employees due to workforce reductions or other departures; and

Many of these factors are outside of our control and have resulted, and could continue to result, in increased costs, decreases in expected revenues and diversion of management’s time and attention, which has materially impacted, and could continue to materially impact the combined company. If we cannot successfullyfully integrate our and Sierra Wireless’ businesses and operations, or if there are further delays in completing the integration, it could further negatively impact our ability to realize the anticipated benefits of the Sierra Wireless Acquisition, which in turn could adversely affect our financial condition and operating results.

We maintain and rely upon certain critical information systems for the effective operation of our business. These information systems include telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, network communications, and e-mail. In some cases, these systems are also used to provide services to our customers. These information systems may be owned by us or by our outsource providers or even third parties such as vendors and contractors and may be maintained by us or by such providers or third parties. These information systems are subject to attacks, failures, and access denials from a number of potential sources including viruses, destructive or inadequate code, insider threats, power failures, and physical damage to computers, hard drives, communication lines and networking equipment. These cybersecurity threats evolve rapidly, including through emerging technologies such as AI. Our use of AI may increase vulnerability to cybersecurity risks, including through unauthorized use or misuse of AI tools, and bad inputs or logic, or the introduction of malicious code incorporated into AI generated code. AI and machine learning may also be used for certain cybersecurity attacks, improving or expanding the existing capabilities of threat actors in unpredictable ways, resulting in greater risks of security incidents and breaches. To the extent that these information systems are under our control, we have implemented security procedures, such as virus protection software, security procedures and emergency recovery processes, to address the outlined risks; however, these measures may not prevent all incidents and our inability to use or access these information systems at critical points in time could unfavorably impact the timely and efficient operation of our business. If the systems used for the provision of services to our customers are disrupted, our revenues may be affected, we may incur other liabilities to our customers, and we may suffer reputational damage. Additionally, any compromise of our information security could result in the unauthorized access toto, or disclosure ofof, our confidential business or proprietary information, including potential theft of our intellectual property or trade secrets (including our proprietary technology) or the unauthorized release of customer, supplier or employee data and result in a violation of privacy or other laws, thus exposing us to litigation, regulatory enforcement or damage to our reputation. To the extent that our business is interrupted or data or proprietary technology is lost, destroyed or inappropriately used or disclosed, such disruption could adversely affect our competitive position, relationship with customers, suppliers or employees or our business, financial condition and operating results. In addition, we may be required to incur significant costs to protect against or repair the damage caused by these disruptions or security breaches in the future, and our insurance may not be adequate to fully reimburse us for all costs and losses we incur.

We have expanded our operations through the Sierra Wireless Acquisition and the HieFo Acquisition, and we may continue to expand and diversify our operations with additional acquisitions. Acquisitions may divert management attention and resources from other business objectives. Acquisitions have used and could use in the future a significant portion of our available liquid assets or we could incur debt or issue equity securities to fund acquisitions. Any issuance of equity securities could be dilutive to existing stockholders. Debt financing could subject us to restrictive covenants that could have an adverse effect on our business. Although weWe undertake detailed reviews of proposed acquisition candidates and attempt to negotiate acquisition terms favorable to us, but we may encounter difficulties or incur liabilities for which we have no recourse. Any acquisition may not have a positive impact on our future performance.

We are a leading provider of high-performance semiconductor,semiconductors powering data center networking, IoT systemsconnectivity and cloudcellular connectivity serviceinfrastructure solutions and were incorporated in Delaware in 1960. We design, develop, manufacture and market a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets. InfrastructureThe infrastructure end market includes data centers, PON, base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless LAN and other communication infrastructure equipment.equipment This marketand has expanded to support artificial intelligence-drivenAI-driven applications and general compute data center applications. High-endThe high-end consumer end market includes smartphones, tablets, smart glasses, wearables, desktops, notebooks, wireless charging, set-top boxes, digital televisions, monitors and displays, digital video recordersnotebooks and other consumer equipment. IndustrialThe industrial end market includes IoT applications such as connected spaces (smart cities, buildings, factories, facilities and commercial buildings), smart utilities (electricity, water, gas and smart grid), wireless charging, medical, security systems, automotive, industrial and home automation, supply chain management, asset tracking and logistics, analog and digital video broadcast equipment, video-over-IP solutions and other industrial equipment. Our end customers for our silicon solutions are primarily OEMs that produce and sell technology solutions. Our IoT module, router, gateway and managed connectivity solutions ship to IoT device makers and enterprises to provide IoT connectivity to end devices.

We report results on the basis of 52 and 53 week periods and our fiscal year ends on the last Sunday in January. Fiscal years 2025,2026, 20242025 and 20232024 each consisted of 52 weeks. Our fiscal year 2027 will consist of 53 weeks.

The increasing adoption of our LoRa Technologytechnology for low power wide-area networks is providing connectivity solutions that enable IoT networks to make a smarter, more connected planet. The growing deployment of on-device AI in IoT applications further strengthens this opportunity: edge AI architectures transmit processed insights rather than raw sensor data, dramatically reducing bandwidth requirements and making the long-range, low-power characteristics of LoRa an ideal complement to AI-enabled IoT devices across industrial, security, smart city applications and more. Our portfolio of optical and copper connectivity solutions continue to address the demand for greater bandwidth and higher performance, while using less power by our global hyper-scale data center customers. Additionally, the unexpectedrapid pivot to online learning and remote work environments during the COVID-19 pandemic exposed the fragile natureexpansion of manyAI global networks that struggled under the spike in demand. Thisworkloads has driven infrastructure suppliers around the world to accelerate their investments in high-speed connectivity using 5G wireless and PON technology where we are an industry leader.leader, Though network capacities have normalized to accommodate remote environments,and industry demand within hyperscale data centers havehas expandedcontinued to expand to support artificialboth intelligence-drivenAI-driven applications, as well asand general compute data center applications.

Following our acquisition of Sierra Wireless, Inc. in January 2023, weWe supply cellular wireless devices and provide services in the wireless communications and information technology industries, enabling connectivity for IoT solutions through cellular and short-range wireless technologies. These technologies primarily include 3G standards such as UMTS (including HSPDA and HSUPA) and EV-DO; 4G standards such as HSPA+, LTE, LTE-A; 5G standards such as fifth generation new radio ("5G NR") standards (both millimeter wave and sub-6 Gigahertz frequencies); Low Power Wide Area ("LPWA") standards such as LTE-M and NB-IoT; and wireless local area network technologies such as Wi-Fi and Bluetooth; and Global Navigation Satellite System ("GNSS") positioning.

We also offer IoT connectivity services that help customers simplify their IoT journey, whether their machines or other connected assets are regionally located or globally dispersed. Our connectivity services optimize and simplify North American and Asia Pacific deployments, with multi-carrier options for IoT deployments in the U.S., Canada, Mexico, China, Australia, and New Zealand and a single point of accountability for connectivity management. We also accelerate global IoT deployments by providing a solution for customers to maintain a secure connection to assets throughout the world.

We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China, Israel, Japan, Taiwan and Vietnam. A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including Canada, China, Malaysia, Taiwan and Vietnam. Net sales outside the United States for fiscal years 2025,2026, 20242025 and 20232024 constituted approximately 79%,82%, 76%79% and 87%,76%, respectively, of our net sales. Approximately 64%,67%, 58%64% and 72%58% of net sales in fiscal years 2025,2026, 20242025 and 2023,2024, respectively, were to customers located in the Asia-Pacific region. We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers in certain regions. In addition, changes in tariffs or the imposition of retaliatory tariffs may impact our net sales and gross profit if we are unable to pass higher costs on to our customers.

A discussion of our results of operations for the fiscal years ended January 25, 2026 and January 26, 2025 and year-over-year comparisons between these fiscal years appears below. With the exception of net sales and gross profit, which are discussed below to reflect the changes to our reportable segments, a discussion of our results of operations for the fiscal year ended January 29,28, 20232024 and year-over-year comparisons between fiscal years 20242025 and 20232024 have been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended January 28,26, 2024,2025, filed with the SEC on March 28,25, 2024.2025.

Net sales for fiscal year 20252026 were $909.3$1,050.0 million, an increase of 5%15% compared to $868.8$909.3 million for fiscal year 20242025 primarily driven by higher net sales across all major end markets, particularly from our infrastructure and high-endindustrial consumerend markets due to stronger demand and increased sales volume, partially offset by softer demand resulting in lower volume in our industrial market.volume. Net sales from our infrastructure end market increased $79.8$66.7 million versus the prior year driven by an approximately $66.5$81.4 million increase in data center sales and an approximately $19.1$4.7 million increase in telecommunicationsinfrastructure TVS product sales, partially offset by an approximately $5.8$20.0 million decrease in infrastructuretelecommunications TVSsales. Net sales from our industrial end market increased $66.0 million primarily due to an approximately $39.7 million increase in LoRa-enabled sales in industrial applications and an approximately $34.3 million increase in IoT Hardware sales, partially offset by an approximately $9.0 million decrease in other industrial product sales. Net sales from our high-end consumer end market increased $21.8$8.0 million primarily driven by an increase in consumer TVS product sales. Net sales from our industrial end market decreased $61.1 million primarily due to an approximately $107.4 million decrease in IoT Hardware sales and approximately $2.4 million decrease in industrial TVS product sales, all of which were driven by softer demand, partially offset by an approximately $55.1 million increase in LoRa-enabled sales in industrial applications.

Net sales from Signal Integrity increased $84.7$60.9 million in fiscal year 20252026 versus fiscal year 20242025 primarily duedriven toby an approximately $66.5$81.4 million increase in data center salessales, andpartially offset by an approximately $19.1$20.0 million increasedecrease in telecommunications sales, both driven by stronger demand.sales. Net sales from Analog Mixed Signal and Wireless increased $62.6$50.5 million in fiscal year 20252026 versus fiscal year 20242025 primarily due to an approximately $51.2$39.8 million increase in LoRa-enabled sales and approximately $15.1$17.3 million increase in total TVS product sales, both driven by stronger demand. Net sales from IoT Systems and Connectivity decreasedincreased $106.8$29.3 million in fiscal year 20252026 versus fiscal year 20242025 primarily due to an approximately $107.4$34.3 million decreaseincrease in IoT Hardware sales, driven by softerstronger demand.

In fiscal year 2025,2026, gross profit increased to $456.5$542.1 million from $296.3$456.5 million in fiscal year 2024.2025. This increase was primarily due to $91.8 million of acquired technology impairments in fiscal year 2024, a $61.4$47.7 million increase from Signal Integrity primarily driven by higher data center sales and telecommunications sales due to stronger demand, partially offset by lower telecommunications sales, a $32.8$40.6 million increase from Analog Mixed Signal and Wireless primarily driven by higher LoRa-enabled product sales and TVS product sales due to stronger demand, a $24.6 million decrease in the amortization of acquired technology intangible assets related to the Sierra Wireless Acquisition due to impairments in the fourth quarter of fiscal year 2024, partially offset by a $53.9$1.8 million decrease from IoT Systems and Connectivity primarily driven by lower IoT Hardware sales due to softer demand.Connectivity.

Our gross margin was 51.6% in fiscal year 2026, compared to 50.2% in fiscal year 2025, compared to 34.1% in fiscal year 2024.2025. Gross margin in Signal Integrity was 65.2% in fiscal year 2026, compared to 62.1% in fiscal year 2025, compared to 57.2% in fiscal year 20242025 primarily due to higherimproved sales,overhead which increased volumeabsorption and reducedfavorable overhead.product mix. Gross margin in Analog Mixed Signal and Wireless was 58.9% in fiscal year 2026, compared to 55.6% in fiscal year 2025, compared to 56.3% in fiscal year 20242025 primarily due to unfavorablefavorable product mix and pricing pressures.mix. Gross margin in IoT Systems and Connectivity was 35.5% in fiscal year 2026, compared to 39.3% in fiscal year 2025, compared to 42.1% in fiscal year 20242025 primarily due to lowerunfavorable IoTproduct Hardware sales, particularly module sales resulting in decreased volume.mix.

Product development and engineering expenses decreasedincreased $15.5$25.4 million for fiscal year 20252026 compared to fiscal year 20242025 primarily as a result of thea full-year$16.0 effectmillion ofnet costincrease reduction,in staffing-related costs, including staffing-relatedhigher supplemental compensation, a $7.8 million increase from new product introduction expenses, and projecta costs,$2.1 initiatedmillion duringincrease fiscalin yearfacilities, 2024.partially offset by a $1.5 million increase in tax credit recoveries. The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period-over-period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services, which are typically recorded as a reduction to product development and engineering expense.

Selling, general and administrative expenses increaseddecreased $2.1$0.5 million for fiscal year 20252026 compared to fiscal year 20242025 primarily as a result of a $16.7$7.7 million net increasedecrease in staffing-related costs,costs whichdriven reflectsby higherlower share-based andcompensation othercaused supplementalby compensationremeasurement of the cash-settled awards liability, partially offset by lower headcount from restructuring, a $4.0$3.4 million increase in consulting expenses, a $2.7$1.8 million increase in depreciationbad partiallydebt offsetreserve byexpense, a $21.3$1.6 million decreaseincrease in transaction and integration expenses primarily related toexpenses, theand Sierraa Wireless$0.3 Acquisition.million increase in facilities.

Intangible amortization was $0.6 million and $0.9 million for fiscal yearyears 20252026 decreasedand $14.02025, million compared to fiscal year 2024 due to impairment of acquired technology intangible assets related to the Sierra Wireless Acquisition in the fourth quarter of fiscal year 2024.respectively. The amortization of acquired technology intangible assets is reflected in cost of sales.

Restructuring expenses decreasedwere $18.8$4.2 million and $4.9 million for fiscal yearyears 20252026 comparedand to2025, fiscalrespectively, yearfrom 2024 due to thestructural reorganization actions primarily taken in the prior fiscal year to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.alignment.

Interest expenseexpense, including amortization and a write-off of deferred financing costs, was $90.1$40.6 million and $95.8$90.1 million for fiscal years 20252026 and 2024,2025, respectively. The $5.7$49.4 million decrease was primarily due to interest savings as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025, debtand the full repayment of $283.3 million on the Revolving Credit Facility (as defined below) and debt repayment of $441.4 million on the Term Loans in(as defined below) from the fourth quarter of fiscal year 2025,2025 through the third quarter of fiscal year 2026, partially offset by $13.2the induced conversion expense of $21.2 million write-offin connection with the 2025 Exchange of deferred2027 financing costsNotes and debt2025 discount.Exchange Seeof Note2028 10, Long-Term Debt, to our Consolidated Financial Statements for additional information.Notes.

We recorded income tax expense of $19.8 million for fiscal year 2026 compared to income tax benefit of $22.0 million for fiscal year 2025 compared to income tax expense of $50.5 million for fiscal year 2024.2025. The effective tax rates for fiscal years 20252026 and 20242025 were 12.0%(93.6%) and 4.9%,12.0%, respectively. Our effective tax rate for fiscal year 20252026 differs from the statutory federal income tax rate of 21% primarily due to our regional mix of income, changes in valuation allowance, nondeductible losslosses on debt extinguishment, return to provision adjustments on Swiss impairment losses, tax related to a gain associated with an intra-entity asset transferextinguishment and goodwill impairments and the impact of rate changes on deferred tax assets. The Tax Act requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. We have elected to treat global intangible low-taxed income ("GILTI") as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes.

We believe that our cash on hand, expected cash generation from future operations and available borrowing capacity under the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility" (as defined below) are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements. As of January 26,25, 2025,2026, we had $151.7$195.2 million in cash and cash equivalents and $334.7$451.6 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults. Over the longer-term, we expect to fund our business using cash flows from operating activities.

As of January 25, 2026 and January 26, 2025, there was $2.9$3.4 million outstanding under letters of credit under the Revolving Credit Facility.

Our operating cash flows are driven by our ability to value price for the differentiated technology that we provide, as well as our fablessfab-lite business model, which is highly flexible to changes in customer demand.

On November 7, 2019, we, with certain of our domestic subsidiaries as guarantors, entered into a credit agreement with the lenders party thereto and HSBC Bank USA, National Association, as administrative agent, swing line lender and letter of credit issuer. On September 26, 2022 (the "Third Restatement Effective Date"),2022, we entered into a third amendedamendment and restatedrestatement credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and letter of credit issuer.

Up to $40.0 million of the Revolving Credit Facility may be used to obtain letters of credit, up to $25.0 million of the Revolving Credit Facility may be used to obtain swing line loans, and up to $75.0 million of the Revolving Credit Facility may be used to obtain revolving loans and letters of credit in certain currencies other than U.S. Dollars ("Alternative Currencies").Dollars. The proceeds of the Revolving Credit Facility may be used by us for capital expenditures, permitted acquisitions, permitted dividends, working capital and general corporate purposes.

TheApart from the below, the risk factors associated with our business have not materially changed as compared to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended January 25, 2026.

Semtech Corporation (together with its consolidated subsidiaries, the "Company," "we," "our" or "us") is a leading provider of high-performance semiconductors powering AI data center networking,networking and intelligent, connected IoT connectivitydevices and cellular infrastructure solutionsworldwide and was incorporated in Delaware in 1960. We have three operating segments—Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity—that represent three separate reportable segments. See Part I, Item 1, Note 14,15, Segment Information, to our interim unaudited condensed consolidated financial statements for additional information on our reportable segments.

Analog Mixed Signal and Wireless. We design, develop, manufacture and market high-performance protection devices, which are often referred to as transient voltage suppressors ("TVS") and specialized sensing products. TVS devices provide protection for electronic systems where voltage spikes (called transients), such as electrostatic discharge, electrical over-stress or secondary lightning surge energy, can permanently damage sensitive ICs. Our portfolio of protection solutions includeincludes filter and termination devices that are integrated with the TVS device. Our products provide robust protection while preserving signal integrity in high-speed communications, networking and video interfaces. These products also operate at very low voltage. Our protection products can be found in a broad range of applications including smart-phones,smartphones, LCD and organic light-emitting diode TVs and displays, set-top boxes, monitors and displays, tablets, computers, notebooks, base stations, routers, automobile and industrial systems. Our unique sensing technology enables proximity sensing, force sensing, and advanced user interface solutions for mobile, consumer, computing and automotive products. We also design, develop, manufacture and market a portfolio of specialized radio frequency products used in a wide variety of industrial, medical and communications applications. Our wireless products, which include our LoRa® devices and wireless radio frequency technology, feature industry-leading and longest-range industrial, scientific and medical radio, enabling a lower total cost of ownership and increased reliability. These features make these products particularly suitable for machine-to-machine and IoT applications. We also design, develop, and market power product devices that control, alter, regulate, and condition the power within electronic systems focused on the LoRa and IoT infrastructure segment. The highest volume product types within this category are switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging. Our video products offer advanced solutions for highly differentiated audio video-over-IP technology for professional audio video applications.

As disclosed in Part I, Item 1A: Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended January 25, 2026, the Company’s business is subject to risks related to, among other factors, tariffs and other trade barriers put in the place by government authorities. The imposition of tariffs and other trade barriers by government authorities on imported goods, including raw materials and components essential to our manufacturing processes, could have significant adverse effects on our business, financial condition, and results of operations. Beginning in the first quarter of fiscal year 2026, the U.S. government imposed additional tariffs on goods imported into the U.S. from numerous countries ("U.S. Tariffs") and multiple countries and groups of countries imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. In February 2026, the U.S. Supreme Court ruled that certain of those U.S. Tariffs imposed under the International Emergency Economic Powers Act were not authorized by statute, and the legal status, scope and implementation of certain U.S. Tariffs and related measures continue to evolve. Various modifications, suspensions and delays to the U.S. Tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures imposed under alternate legal authorities. The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. Tariffs or other measures are announced or imposed, the extent to which existing tariffs remain in effect, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures. The Company continues to monitor and analyze the impacts of these measures and actions that can be taken to moderate and/or minimize their effects.

Most of our sales to customers are made on the basis of individual customer purchase orders and many customers include cancellation provisions in their purchase orders. We rely on orders received and shipped within the same quarter for a meaningful portion of our sales. Net sales made through independent distributors during the firstsecond quarters of fiscal years 2027 and 2026 were 80%75% and 71%,74%, respectively, of net sales and the remainder were made directly to customers.

We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China, Israel, Japan, Taiwan and Vietnam. A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including China, Malaysia, Taiwan and Vietnam. Net sales outside the United States constituted 86%85% and 82%81% during the firstsecond quarters of fiscal years 2027 and 2026, respectively. Approximately 72%70% and 63%65% of our net sales during the firstsecond quarters of fiscal years 2027 and 2026, respectively, were to customers located in the Asia-Pacific region. We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers in certain regions. In addition, changes in tariffs or the imposition of retaliatory tariffs may impact our net sales, gross profit, and gross margin if we are unable to pass higher costs on to our customers.

Comparisons of the Three and Six Months Ended AprilJuly 26, 2026 and AprilJuly 27, 2025

Net sales in the firstsecond quarter of fiscal year 2027 were $291.0$341.9 million, an increase of 15.9%32.7% compared to $251.1$257.6 million in the firstsecond quarter of fiscal year 2026, which was primarily driven by higher net sales from our infrastructure and industrial end markets due to stronger demand and increased sales volume. Net sales from our infrastructure end market increased $25.9$50.4 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $20.0$47.4 million increase in data center sales and approximately $5.1 million increase in telecommunications sales. Net sales from our industrial end market increased $11.1$35.8 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $5.6$21.3 million increase in LoRa-enabled sales in industrial applications, approximately $3.3 million increase in broadcast salesapplications and approximately $2.6$11.7 million increase in IoT Hardware sales. Net sales from our high-end consumer end market increaseddecreased $2.9$1.9 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $5.9$4.0 million increasedecrease in consumerproximity TVSsensing product sales, partially offset by an approximately $2.9$1.9 million decreaseincrease in proximityconsumer sensingTVS product sales.

Net sales in the firstsecond quarter of fiscal year 2027, as compared to the firstsecond quarter of fiscal year 2026, benefited from stronger demand and increased sales volumes in all the reportable segments. Net sales from Signal Integrity increased $28.5$49.4 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $20.0$47.4 million increase in data center sales, approximately $5.1 million increase in telecommunications sales and approximately $3.3 million increase in broadcast sales. Net sales from Analog Mixed Signal and Wireless increased $10.1$25.3 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $6.6$21.8 million increase in LoRa-enabled product sales and approximately $6.3 million increase in total TVS product sales and approximately $5.7 million increase in LoRa-enabled product sales, partially offset by an approximately $2.9$4.0 million decrease in proximity sensing product sales. Net sales from IoT Systems and Connectivity increased $1.3$9.6 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026, primarily driven by an approximately $2.6$11.7 million increase in IoT Hardware sales, partially offset by an approximately $1.5$2.1 million decrease in managed connectivity sales.

In the firstsecond quarter of fiscal year 2027, gross profit increased $20.2$49.7 million to $151.5$183.8 million from $131.3$134.1 million in the firstsecond quarter of fiscal year 2026. This increase was primarily driven by an approximately $15.8$34.6 million increase from Signal Integrity, which experienced higher sales led by data center sales due to stronger demand, an approximately $2.7$16.0 million increase from Analog Mixed Signal and Wireless, which experienced higher sales led by TVSLoRa-enabled product sales and LoRa-enabledTVS product sales due to stronger demand, andoffset by an approximately $1.6 million increasedecrease from IoT Systems and Connectivity, primarily driven by higherlower IoTmanaged Hardwareconnectivity sales.

Product development and engineering expenses increased $10.0$12.4 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026 primarily as a result of an $8.8$8.2 million net increase in staffing-related costs from higher salariesheadcount and share-basedsupplemental compensationcompensation, and a $1.4$3.0 million increase from new product introduction expenses, partially offset by a $1.3 million increase in tax credits.expenses.

Selling, general and administrative expenses increased $20.2$8.9 million in the firstsecond quarter of fiscal year 2027 compared to the firstsecond quarter of fiscal year 2026 primarily as a result of a $10.4$5.4 million increase in share-based compensation mainly from revaluation of the cash-settled awards caused by the impact of the higher closing stock price as of period-end,period-end and a $9.0$3.7 million net increase in staffing-related costs from higher supplemental compensation and share-based compensation, and a $1.7 million increase in transaction and integration expenses, partially offset by a $0.9$0.8 million decrease in depreciation.

Intangible amortization was $0.3$0.4 million and $0.1 million for the firstsecond quarters of fiscal years 2027 and 2026, respectively.respectively, and $0.7 million and $0.3 million for the first six months of fiscal years 2027 and 2026. The amortization of acquired technology intangible assets is reflected in cost of sales.

Interest expense, including amortization and a write-off of deferred financing costs, decreased by $4.7$3.3 million to $1.9$2.0 million for the firstsecond quarter of fiscal year 2027, compared to $6.6$5.2 million for the firstsecond quarter of fiscal year 2026, primarily due to interest savings as a result of the full repayment of the Term Loans (as defined below) fromin the fourththird quarter of fiscal year 20252026, throughpartial and full repayment of the 2027 and 2028 Notes, respectively, using net proceeds from the 2030 Notes (discussed below) and common stock considerations in the third quarter of fiscal year 2026.

We recorded income tax expensebenefit of $0.1$101.4 million in the firstsecond quarter of fiscal year 2027, compared to income tax expense of $8.7$4.8 million in the firstsecond quarter of fiscal year 2026. The change in our tax provision for the three months ended AprilJuly 26, 2026, compared to the three months ended AprilJuly 27, 2025 was primarily due to athe release of U.S. valuation allowance, changes in regional mix of income,income and tax benefit of investment impairment losseslosses. andThe changes in valuation allowance. As a result of our recent performance, there is a reasonable possibility that a portion of ourU.S. valuation allowance will no longer be needed in future periods. A release of the valuation allowance would likely resultresulted in a material$112.4 million non-cash tax benefit recognized infor the second quarter of thefiscal release.year 2027.

In the first six months of fiscal year 2027, we recorded income tax benefit of $101.2 million, compared to income tax expense of $13.4 million in the first six months of fiscal year 2026. The change in our tax provision for the six months ended July 26, 2026, compared to the six months ended July 27, 2025, was primarily due to the release of U.S. valuation allowance, a regional mix of income, tax benefit of investment impairment losses, impact of global intangible low-taxed income ("GILTI") and research and development (“R&D") credits. The effective tax rates in the firstsecond quarters of fiscal years 2027 and 2026 differ from the statutory federal income tax rate of 21% primarily due to changes in valuation allowance, regional mix of income, changes in valuation allowance, impact of global intangible low-taxed income ("GILTI") and research and development ("R&D") credits. The Tax Cuts and Jobs Act ("TCJA") requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. We have elected to treat GILTI as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes.

On July 4, 2025, the One Big Beautiful Bill Act ("OB3") was enacted into law in the U.S. The OB3 modifies certain elements of the TCJA, including permanently changing the limitation on the deduction of business interest expense, as well as making permanent the immediate deduction for domestic R&D expenses. The remaining provisions of the OB3 have multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. As the Company maintains a full valuation allowance on its U.S. deferred tax assets, the enactment of the legislation did not have a material impact on the Company's effective tax rate as of April 26, 2026. This legislation may be subject to further clarification and the issuance of interpretive guidance; however, the remaining provisions of the OB3 are not expected to have a material effect on our consolidated financial statements. We will continue to monitor the potential future impacts of the OB3, including provisions that become effective in subsequent periods, and will reflect any material changes in itsour financial statements when appropriate.

In December 2021, the Organization for Economic Cooperation and Development published a framework for a new global minimum tax of 15% ("Pillar Two") on income arising in low-tax jurisdictions, and certain governments in countries where the Company operates have enacted local Pillar Two legislation, with an effective date from January 1, 2024. Pillar Two did not have a material impact on our provision for income taxes for the fiscal quarter endingended AprilJuly 26, 2026.

We believe that our cash on hand, expected cash generation from future operations and available borrowing capacity under the 2026 Revolving Credit FacilityFacility, as defined and discussed below, are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements. As of AprilJuly 26, 2026, we had $163.3$204.1 million in cash and cash equivalents and $451.6$356.6 million of available undrawn borrowing capacity on our 2026 Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults. Over the longer-term, we expect to fund our business using cash flows from operating activities.

As of AprilJuly 26, 2026, there was $3.4 million outstanding under the letters of credit under the 2026 Revolving Credit Facility and as of January 25, 2026, there was $3.4 million outstanding under the letters of credit under the 2019 Revolving Credit Facility.

A meaningful portion of our capital resources, and the liquidity they represent, are held by our subsidiaries outside of the U.S. As of AprilJuly 26, 2026, our foreign subsidiaries held $152.5$185.9 million of cash and cash equivalents, compared to $182.7 million at January 25, 2026. Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see Item 3–Quantitative and Qualitative Disclosures About Market Risk.

In connection with the enactment of the TCJA, all historic and current foreign earnings are taxed in the U.S. Depending on the jurisdiction, these foreign earnings are potentially subject to a withholding tax, if repatriated. As of AprilJuly 26, 2026, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the TCJA, which amended the Internal Revenue Code of 1986, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax. As a result of the U.S. taxation of these amounts, we have determined that none of the foreign earnings from fiscal year 2023 onward will be permanently reinvested outside of the U.S. If we needed to remit all or a portion of our historical undistributed earnings to the U.S. for investment in our domestic operations, any such remittance could result in increased tax liabilities and a higher effective tax rate. Determination of the amount of the unrecognized potential deferred tax liability on these unremitted earnings is not practicable.

On September 26, 2022, we entered into a third amendment and restatement credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the "2019 Credit Agreement") with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and letter of credit issuer.

On April 24, 2025, we entered into the fourth amendment (the "Fourth Amendment") to the 2019 Credit Agreement, in order to, among other things, increase the total available borrowing capacity under the revolving credit facility under the 2019 Credit Agreement (the "2019 Revolving Credit Facility") by $117.5 million, increasing the total facility size to $455.0 million. The increase partially replaces borrowing capacity that matured on November 7, 2024. Other than the foregoing, the material terms of the 2019 Credit Agreement remain unchanged.

After effectiveness of the Fourth Amendment, the borrowing capacity on the 2019 Revolving Credit Facility iswas $455.0 million, which iswas scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity), and the term loans thereunder (the "Term Loans") were scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity).

We had entered into interest rate swap agreements to hedge the variability of interest payments on debt outstanding under the Term Loans. As of AprilJuly 26, 2026, there were no interest rate swap agreements outstanding. See Note 16,17, Derivatives and Hedging Activities, to our interim unaudited condensed consolidated financial statements for additional information.

On October 12, 2022 and October 21, 2022, we issued and sold $300.0 million and $19.5 million, respectively, in aggregate principal amount of the 2027 Notes in a private placement. The 2027 Notes were issued pursuant to an indenture dated October 12, 2022, by and among us, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2027 Notes bear interest at a rate of 1.625% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2023. The 2027 Notes will mature on November 1, 2027, unless earlier converted, redeemed or repurchased. The 2027 Notes are not currently redeemable and, as of October 26, 2025, one of the conditions allowing holders of the 2027 Notes to convert had been met. The trading price of our common stock remained above 130% of the applicable conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, April 24, 2026 (the last trading day of the quarter ended April 26, 2026), resulting in the right of the holders of the 2027 Notes to convert their 2027 Notes beginning April 27, 2026 through July 24, 2026 (the last trading day of the quarter ending July 26, 2026). Should the holders of the 2027 Notes elect to convert some or all of the outstanding 2027 Notes, thewe Company intendsintend to draw on itsthe 2026 Revolving Credit Facility to settle the obligation. The 2027 Notes were initially issued pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.

We used approximately $72.6 million of the net proceeds from the 2027 Notes to pay for the cost of the Convertible Note Hedges, after such cost was partially offset by approximately $42.9 million of proceeds to us from the sale of Warrants in connection with the issuance of the 2027 Notes, all as defined and described in Note 8,9, Long-Term DebtDebt, to our interim unaudited condensed consolidated financial statements. The Convertible Note Hedges and Warrants transactions are indexed to, and potentially settled in, our common stock and the net cost of $29.7 million has been recorded as a reduction to "Additional paid-in capital" on the Balance Sheets. We used the remaining net proceeds to fund a portion of the consideration in the Sierra Wireless Acquisition and to pay related fees and expenses. For additional information on the 2027 Notes, Convertible Note Hedges and the Warrants, see Note 8,9, Long-Term DebtDebt, to our interim unaudited condensed consolidated financial statements.

In connection with the 2025 Exchange of 2027 Notes, the Companywe also terminated the Convertible Note Hedges and the Warrants corresponding to the number of 2027 Notes exchanged. The Company received approximately $24.5 million in connection with the termination, which was recorded as an increase to additional paid-in capital on the Balance Sheets.

On October 26, 2023, we issued and sold $250.0 million in aggregate principal amount of 2028 Notes in a private placement. The 2028 Notes were issued pursuant to an indenture, dated October 26, 2023, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2028 Notes bore interest at a rate of 4.00% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2024. The 2028 Notes were scheduled to mature on November 1, 2028, unless earlier converted, redeemed or repurchased. The 2028 Notes were offered and sold only to eligible purchasers who are both "qualified institutional buyers" within the meaning of Rule 144A under the Securities Act and "accredited investors" within the meaning of Rule 501(a) under the Securities Act, in reliance on Section 4(a)(2) under the Securities Act. As of AprilJuly 26, 2026, as a result of certain exchange transactions, no amounts remain outstanding under the 2028 Notes.