10-K – 2026-03-23 – smtc-20260125.htm

emerge to disrupt the markets in which we operate through disintermediation of our modules business or other means. We may not be able to compete successfully or withstand competitive pressures.
Risks Relating to Governmental Regulations
Changes in government trade policies, including the imposition of new or higher 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. In addition to tariffs, the U.S. government has implemented export controls, licensing requirements and other restrictions targeting the export of certain technologies, including technologies that may be incorporated into or enable our products. These actions could lead to additional restrictions on our 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 controls on rare earth minerals, resulting in a more fragmented global trade environment. In addition, trade and technology restrictions, tariffs and retaliatory measures imposed by governments globally may weaken demand for our products.
We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the U.S. and other countries, what products may be subject to such actions, or what actions may be taken by the other countries in retaliation. The U.S. government continues to make significant and frequent changes in trade policies that could negatively affect our business, and there may be further changes in trade policy. Accordingly, it is difficult to predict exactly how, and to what extent, such actions may impact our business, or the business of our customers, partners or vendors. Any unfavorable government policies on international trade, such as capital controls or tariffs, may further affect the demand for our products, increase the cost of components, delay production, impact the competitive position of our products or prevent us from being able to sell products in certain countries, and may have a material adverse effect on our business, operating results and financial condition. Any resulting trade wars could have a significant adverse effect on world trade and global economic conditions and could adversely impact our revenues, gross margins and business operations.
Certain of our products and services are subject to laws and regulations in the U.S., Canada, the European Union and other regions in which we operate.
Certain of our products and services are subject to laws and regulations in the U.S., Canada, the European Union and other regions in which we operate. From time to time in the ordinary course we may be required to obtain regulatory approvals or licenses in order to sell certain products and services, which could result in increased costs and inability to sell our products and services.
For example, in the U.S., the FCC regulates many aspects of communications devices and services. In Canada, similar regulations are administered by the Innovation, Science and Economic Development Canada and the Canadian Radio-television and Telecommunications Commission. European Union directives provide comparable regulatory guidance in Europe. Further, regulatory requirements may change, or we may not be able to receive approvals, registrations or licenses from jurisdictions in which we may desire to sell products and services in the future. In addition, many laws and regulations are still evolving and being tested in courts and by regulatory authorities and could be interpreted in ways that could harm our business.
The application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate. Because laws and regulations have continued to develop and evolve rapidly, it is possible that we or our products or services may not be, or may not have been, compliant with each applicable law or regulation. Compliance with applicable laws and regulations may impose substantial costs on our business, and if we fail to comply we may be subject to regulatory and civil liability, additional costs (including fines), reputational harm, and in severe cases, may be prevented from selling our products and services in certain jurisdictions, all of which could materially and adversely affect our business, financial position, results of operation, and cash flows.
We are subject to government regulations and other standards that impose operational and reporting requirements.
We, our suppliers, and our customers are subject to a variety of U.S. federal, foreign, state and local governmental laws, rules and regulations, including laws, rules and regulations governing data privacy protections for personal information, and corrupt practices/anti-bribery prohibitions, that impact our business in terms of ongoing monitoring of compliance. Legislation and related regulations in the U.K. under that country’s Bribery Act could have extra-territorial application of compliance standards
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that may be inconsistent with comparable U.S. law, requiring us to re-evaluate and amend our compliance programs, policies and initiatives.
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. The 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.
These developments also may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. This, in turn, could make it more difficult for us to attract and retain qualified members of our Board of Directors, or qualified executive officers.
Failure to comply with present or future laws, rules and regulations of any kind that govern our business could result in suspension of all or a portion of production, cessation of all or a portion of operations, or the imposition of significant regulatory, administrative, civil, or criminal penalties or sanctions, any of which could harm our business.
Our failure to comply with any applicable environmental regulations could result in a range of consequences, including fines, suspension of production, excess inventory, sales limitations, and criminal and civil liabilities.
We are subject to various state, federal and international laws and regulations governing the environment, including those restricting the presence of certain substances in electronic products and making producers of those products financially responsible for the collection, treatment, recycling and disposal of those products and those related to the use, storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals and the incorporation of such substances into products available for sale. If we or our suppliers were to incur substantial additional expenses to acquire equipment or otherwise comply with environmental regulations, product costs could significantly increase, thus harming our business. If we violate or fail to comply with any of them, a range of consequences could result, including fines, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. We could also be held liable for any and all consequences arising out of exposure to hazardous materials used, stored, released, disposed of by us or located at, under or emanating from our facilities or other environmental or natural resource damage. We have incurred, and may continue to incur, liabilities under various statutes for the cleanup of pollutants at locations we have operated and at third-party disposal and recycling sites we have used.
Environmental laws are complex, change frequently and have tended to become more stringent over time. For example, the E.U. and China are two among a growing number of jurisdictions that have enacted restrictions on the use of lead, among other chemicals, in electronic products. These regulations affect semiconductor packaging. There is a risk that the cost, quality and manufacturing yields of lead-free products may be less favorable compared to lead-based products or that the transition to lead-free products may produce sudden changes in demand, which may result in excess inventory. Future environmental legal requirements may become more stringent or costly and our compliance costs and potential liabilities arising from past and future releases of, or exposure to, hazardous substances may harm our business and our reputation.
The processing of user data (including personal information) could give rise to liabilities or additional costs as a result of laws, governmental regulations and mobile network operator and other customer requirements or differing views of individuals’ privacy rights.
Certain of our products and services as well as the operation of our businesses involves the collection, use, processing, disclosure, transmission and storage ("Processing") of a large volume of data (including personal information). Numerous state, federal and international laws, rules and regulations govern the Processing of personal information and can expose us to third party claims, enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties, significant legal liability and harm to our reputation if our compliance efforts fail or are perceived to fail.
For example, the European Union General Data Protection Regulation ("GDPR") became effective on May 25, 2018. Failure to comply with the GDPR may result in fines of up to the greater of 20 million euros or 4% of a company’s annual global revenue. Canada’s Personal Information Protection and Electronic Documents Act and applicable provincial laws also impose strict requirements for Processing personal information that applies to our business operations. And in the U.S., a number of states have enacted or have proposed to enact state privacy laws. For example, the California Consumer Privacy Act ("CCPA") gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered businesses to provide new disclosures to California residents and provide such individuals ways to opt-out of certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that is expected to increase data breach litigation. Additionally, the California Privacy Rights and Enforcement Act of 2020
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("CPRA") further expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements. A determination that we have violated any of these or other privacy or data protection laws could result in significant damage awards, fines and other penalties that could, individually or in the aggregate, materially harm our business and reputation.
Furthermore, the interpretation of privacy and data protection laws in a number of jurisdictions is unclear and in a state of flux. There is a risk that these laws may be interpreted and applied in conflicting ways from jurisdiction to jurisdiction. Complying with these varying state, federal and international requirements could cause us to incur additional costs and change our business practices. In addition, because our products and services are sold and used worldwide, we may be required to comply with laws and regulations in countries or states where we have no local entity, employees, or infrastructure.
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.
In addition, our efforts to protect our systems and the data (including personal information) processed may be unsuccessful. We and our service providers may suffer a data breach or compromise, hackers or other unauthorized parties may gain access to personal information or other data, and any such data compromise or access may not be discovered or remediated on a timely basis. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition, and results of operations.
Certain of our customers and suppliers require us to comply with their codes of conduct, which may include certain restrictions that may substantially increase our cost of doing business as well as have an adverse effect on our operating efficiencies, operating results and financial condition .
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. We 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 operating results could be adversely affected as a result of changes in our effective tax rates, the adoption of new U.S. or foreign tax legislation or exposure to additional tax liabilities, or by material differences between our forecasted annual effective tax rates and actual tax rates.
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
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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.
The Organization for Economic Co-operation and Development (the "OECD") has been working on a Base Erosion and Profit Shifting ("BEPS") Project, and since 2015 has been issuing guidelines and proposals with respect to various aspects of the existing framework under which our tax obligations are determined in countries in which we do business. In 2021, the OECD announced that more than 140 member jurisdictions have politically committed to potential changes to the international corporate tax system, including enacting a minimum tax rate of at least 15% as part of the OECD’s "Pillar Two" initiative. During December 2022, the European Union reached an agreement on the introduction of a minimum tax directive requiring member states to enact local legislation. On December 22, 2023, the Swiss Federal Council officially declared the entry into force of the Swiss implementation of the OECD’s Pillar Two rules beginning January 1, 2024, which imposes global minimum tax of 15% on multination enterprises with an annual revenue exceeding €750 million in at least two out of the last four years. We met the revenue thresholds requirement in fiscal year 2026, and the impact was recorded as part of our provision for income taxes. The OECD’s proposed changes have not generally been enacted into law in all of the jurisdictions in which we operate. We will continue to monitor countries’ laws with respect to the OECD model rules and the Pillar Two global minimum tax. Future tax law changes resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
Significant judgment is required in the calculation of our tax provision and the resulting tax liabilities as well as determination of our ability to realize our deferred tax assets. Our estimates of future taxable income and the regional mix of this income can change as new information becomes available. Any such changes in our estimates or assumptions can significantly impact our tax provision in a given period by, for example, requiring us to impair existing deferred tax assets. Such required changes could result in us having to restate our consolidated financial statements. Restatements are generally costly and could adversely impact our operating results or have a negative impact on the trading price of our common stock.
In addition, 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.
We may be subject to taxation and review of our compliance with income, value-added and other sales-type tax regulations in other jurisdictions which could negatively affect our operations.
As a global organization, we may be subject to a variety of transfer pricing or permanent establishment challenges by taxing authorities in various jurisdictions. If certain of our non-U.S. activities were treated as carrying on business as a permanent establishment and therefore, subject to income tax in such jurisdiction, our operating results could be materially adversely affected.
We are required to comply with rules regarding value-added taxes and other sales-type taxes in various jurisdictions. If these taxes are not properly collected and paid, our operating results could be materially adversely affected.
Corporate responsibility, specifically related to environmental, social and governance ("ESG") matters, may impose additional costs and expose us to new risks.
Public ESG and sustainability reporting is becoming more broadly expected by certain investors, shareholders and other third parties. Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or "sustainability" metrics. Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision. In addition, certain of our investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable. At the same time, certain governmental representatives and other stakeholders have increasingly expressed or pursued opposing views, legislation and investment expectations around sustainability initiatives, including the enactment or proposal of "anti-ESG" legislation or policies. We may face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to board diversity, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services. A low ESG or sustainability rating by a third-party rating service could also result in the exclusion of our common stock from consideration by certain investors who may elect to invest with our competition instead. Ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks.
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In addition, one or more of our customers have also requested, and other customers may in the future request, that we achieve net zero carbon emissions. We may incur costs to achieve our carbon and other environmental sustainability goals and the goals of our customers. Such activity may require us to modify our supply chain practices, make capital investments to modify certain aspects of our operations or increase our operating costs. We may not achieve any of our climate goals or the goals of our customers and any future investments that we make in furtherance of achieving our climate goals or the goals of our customers may not produce the expected results or meet increasing stakeholder environmental, social and governance expectations. If we do not meet these goals, we could incur adverse publicity and reaction or the loss of business from certain of our customers, which could adversely impact our reputation, and in turn adversely impact our results of operations.
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 enacted 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 2026, we expect that we will be subject to both 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.
Risks Relating to our Business Strategies, Integration, Personnel and Other Operations
Our business and growth depend on our ability to attract and retain qualified personnel, including our management team and other key personnel, and the inability to attract, hire, integrate, train, retain, or motivate specialized technical and management personnel could harm our business and growth.
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. We 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.
In addition, 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 work model or any 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.
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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.
Following the Sierra Wireless Acquisition, we experienced reduced business levels in the business acquired from Sierra Wireless due to 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 may have in the 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 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. 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:
• continuation or worsening of adverse macroeconomic conditions in regions in which we and Sierra Wireless operate;
• difficulties entering new markets and integrating new technologies in which we have no or limited direct prior experience;
• failure to leverage the increased scale of the combined businesses quickly and effectively;
• successfully managing relationships with our combined customer, supplier and distributor base;
• coordinating and integrating independent research and development and engineering teams across technologies and product platforms to enhance product development while reducing costs;
• challenges identifying and assessing changes in the business that could impact our system of internal controls, which resulted in a material weakness and contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level;
• coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development;
• unanticipated costs or liabilities associated with the integration;
• the increased scale and complexity of our operations;
• 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
• diversion of capital and other resources, including management’s attention from other important business objectives.
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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 fully 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 rely on certain critical information systems for the operation of our business and a disruption in our information systems, including those related to cybersecurity, could adversely affect our business operations.
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 owned and maintained by our suppliers to provide services to us. These information systems may be owned or maintained by us, our outsource providers or third parties such as suppliers, vendors and contractors. These information systems may also be used to provide services to our customers.
We face increasingly sophisticated cybersecurity threats including ransomware attacks targeting our manufacturing and supply chain systems through compromised third-party software or hardware; nation-state actors seeking to disrupt semiconductor supply chains or steal intellectual property; insider threats from current or former employees with access to sensitive systems; and AI-enabled attacks designed to circumvent traditional security controls. These cybersecurity threats subject our information systems to attacks, failures, and denial of access from a number of potential sources including viruses, destructive or inadequate code, malware, insider threats, power failures, and physical damage to data centers, computers, hard drives, communication lines and networking equipment.
Our use of AI may increase our vulnerability to certain cybersecurity risks, including through the unauthorized use or misuse of AI tools, loss of control over our proprietary intellectual property, inadvertent disclosure of sensitive data, or the introduction of defective or malicious code into AI-generated code. Further, threat actors may use AI and machine learning technologies to augment traditional attack techniques, improving or expanding their existing capabilities in novel and 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 to, or disclosure of, 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 face risks associated with companies we have acquired in the past and may acquire in the future, as well as risks associated with any divestitures of previously acquired companies or our businesses or product lines.
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. We 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.
If we are unsuccessful in integrating acquired companies into our operations or if integration is more difficult than anticipated, then we may not achieve anticipated cost savings or synergies and may experience disruptions that could harm our business. Acquisitions could have a negative impact on our future earnings by way of poor performance by the acquired company or, if we later conclude we are unable to use or sell an acquired product or technology, we could be required to write down the related intangible assets and goodwill.
Potential divestitures of any previously acquired businesses or our current businesses or product lines, including as part of our portfolio rationalization review, also entail significant risks, including the diversion of management’s attention, difficulties in
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separating the divested operations and the potential loss of key employees or customers. Divestitures could lead to a decrease in revenue and profitability, and any failure to successfully execute these transactions could adversely affect our business, financial condition, and results of operations.
The potential divestiture of our cellular module business creates significant risks and uncertainties that could adversely affect our IoT solutions business, financial condition, and results of operations.
We have publicly announced our intention to divest our cellular module business, which represents a substantial portion of our IoT Systems and Connectivity segment. The divestiture process may take many months or longer to complete and could disrupt normal business operations in several ways.
Key employees in the cellular module business may seek alternative employment due to uncertainty about the future of the cellular module business, including concerns about job security. Such attrition could disrupt customer relationships, product development programs, and day-to-day operations, and we may need to implement retention programs or provide transaction bonuses to retain key employees, increasing our costs.
As the cellular module business shares certain operational resources with our other businesses, separating these shared resources and establishing standalone capabilities for the business being divested (or for our retained businesses) would require significant planning, investment, and execution. Failure to successfully separate operations could disrupt both the divested business and our remaining operations.
Customers of our cellular module business may defer new design wins, accelerate qualification of alternative suppliers, shift business to competitors to reduce supply chain risk and/or cancel existing projects or programs that incorporate our products, which could reduce revenue and profitability during the sale process and negatively affect the valuation of any transaction.
Our senior management team and board of directors must devote substantial time and attention to the divestiture process, which could detract from our core semiconductor businesses and other strategic initiatives.
We may be unable to complete the divestiture on acceptable terms, or at all, due to factors including the inability to find a suitable buyer at an acceptable price; failure to obtain required regulatory approvals or third-party consents; failure to satisfy closing conditions; adverse changes in market conditions or buyer financing; and/or issues discovered during due diligence. If the divestiture is not completed, we would have incurred significant transaction-related costs without realizing the anticipated strategic benefits.
Finally, if the divestiture of our cellular module business is completed, our remaining operations will be more concentrated in certain semiconductor end markets and applications, potentially increasing the volatility of our operating results.
We have incurred substantial impairment charges, and we may be required to recognize additional impairment charges in the future, which could have an adverse effect on our financial condition and operating results.
We assess our goodwill, other intangible assets and our long-lived assets on an annual basis and whenever events or changes in circumstances indicate the carrying value of our assets may not be recoverable, and as and when required by accounting principles generally accepted in the U.S. ("GAAP") to determine whether they are impaired. During fiscal year 2026, we recorded $84.8 million of goodwill impairment and $1.8 million of intangible impairments. During fiscal year 2025, we recorded $7.5 million of goodwill impairment. During fiscal year 2024, we recorded $755.6 million of goodwill impairment and $131.4 million of intangible impairments. See Note 7, Goodwill and Intangible Assets, to our Consolidated Financial Statements for further discussion of these impairment charges. During fiscal years 2026, 2025 and 2024, we also recorded $10.4 million, $1.1 million and $3.9 million of non-cash impairment charges and credit loss reserves on certain of our investments. Future restructuring or appraisal of our business impacting fair value of our assets or changes in estimates of our future cash flows could affect our impairment analysis in future periods and cause us to record either an additional expense for impairment of assets previously determined to be partially impaired or record an expense for impairment of other assets. Depending on future circumstances, we may never realize the full value of intangible assets. Any future determination or impairment of a significant portion of our goodwill and other intangibles could have an adverse effect on our financial condition and operating results.
The costs associated with our indemnification of certain customers, distributors, and other parties could be higher in future periods.
In the normal course of our business, we indemnify other parties, including customers, distributors, and lessors, with respect to certain matters. These obligations typically arise pursuant to contracts under which we agree to hold the other party harmless against losses arising from a breach of representations and covenants related to certain matters, such as acts or omissions of our employees, infringement of third-party intellectual property rights, and certain environmental matters. We may incur significant expense under these indemnification provisions in the future.
We have also entered into agreements with our current and former directors and certain of our current and former executives indemnifying them against certain liabilities incurred in connection with their duties. Our Certificate of Incorporation and Bylaws contain similar indemnification obligations with respect to our current and former directors and employees, as does the
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California Labor Code. We cannot estimate the amount of potential future payments, if any, that we might be required to make as a result of these agreements.
Risks Relating to Compliance
We previously identified material weaknesses in our internal control over financial reporting. We may discover additional weaknesses in the future and otherwise may fail to achieve and maintain effective disclosure controls, procedures and internal control over financial reporting, which could cause our results of operations, stock price and investor confidence in our Company to be adversely affected.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on the effectiveness of their internal control over financial reporting as of the end of each fiscal year. In addition to the Company’s evaluation, our independent registered public accounting firm provides an opinion regarding the effectiveness of our internal control over financial reporting. As disclosed in more detail in Part II, Item 9A, "Controls and Procedures" below, we previously identified material weaknesses that existed as of January 28, 2024, in our internal control over financial reporting. Based on testing performed by management, implemented controls are designed to operate, and are operating, effectively and the material weaknesses have been remediated as of January 26, 2025.
However, we could in the future identify other internal control deficiencies that could rise to the level of a significant deficiency or material weakness or uncover material errors in financial reporting. During the course of our evaluation, we may identify areas requiring improvement and may be required to design additional enhanced processes and controls to address issues identified through this review. In addition, such remediation efforts may not be successful, our internal control over financial reporting may not be effective as a result of these efforts and any such future significant deficiencies identified may be material weaknesses that would be required to be reported in future periods. In addition, our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so.
If we fail to remediate material weaknesses and maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to accurately record, process, and report financial information and, consequently, our ability to prepare financial statements within required time periods could be adversely affected. Failure to maintain effective internal controls could result in a failure to comply with SEC rules and regulations, stock exchange listing requirements, and the covenants under our debt agreements, subject us to litigation, investigations or enforcement actions, negatively affect investor confidence in our financial statements, and adversely impact our stock price and ability to access capital markets. The defense of any such claims, investigations or enforcement actions could cause the diversion of the Company’s attention and resources and could cause us to incur significant legal and other expenses even if the matters are resolved in our favor.
Further, internal controls related to our financial reporting systems are important to accurately reflect our financial position and results of operations in our financial reports. If, as a result of the ineffectiveness of our internal controls, we cannot provide reliable financial statements, our business decision processes may be adversely affected, our business and results of operations could be harmed, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
Risks Relating to our Indebtedness
Our indebtedness could adversely affect our business, financial condition, and results of operations.
The terms of our indebtedness, including under our Credit Agreement (as defined below), could have significant consequences on our future operations, including:
• making it more difficult for us to satisfy our debt obligations and our other ongoing business obligations, which may result in defaults;
• sensitivity to interest rate increases on our variable rate outstanding indebtedness, which could result in increased interest under our credit facilities which could cause our debt service obligations to increase significantly;
• reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;
• limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy;
• placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged; and
• if we receive a downgrade of our credit ratings, our cost of borrowing could increase, negatively affecting our ability to access the capital markets on advantageous terms, or at all.
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Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. Our business may not generate cash flow from operations, and future borrowings may not be available to us under our existing or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our debt obligations and to fund other liquidity needs. Our current and potential vendors and customers have evaluated our levels of indebtedness in establishing credit limits and supplier standards, and indebtedness could dissuade other companies from doing business with us. We may incur substantial additional indebtedness, including secured indebtedness, for many reasons, including to fund acquisitions. If we add additional debt or other liabilities, the related risks that we face could intensify.
Furthermore, a systemic failure of the banking system in the U.S. or globally may result in a situation in which we lose our ability to draw down funds from our Revolving Credit Facility (as defined below), lose access to our deposits and are unable to obtain financing from other sources which could materially and adversely affect our business and financial condition.
Restrictive and financial covenants in the Credit Agreement governing our credit facilities may restrict our ability to pursue our business strategies, and any violation of one or more of these covenants could have a material adverse effect on our financial condition and results of operations.
The Credit Agreement (as defined below) contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests. The Credit Agreement includes covenants restricting, among other things, our and our subsidiaries’ ability to: incur or guarantee additional debt or issue certain preferred stock; pay dividends or make distributions on our capital stock or redeem, repurchase or retire our capital stock; make certain investments and acquisitions; create liens on our or our subsidiaries’ assets; enter into transactions with affiliates; merge or consolidate with another person or sell or otherwise dispose of substantially all of our assets; make certain payments in respect of other material indebtedness; and alter the business that we conduct.
In addition, under the Credit Agreement, we are required to maintain a maximum consolidated leverage ratio and a minimum interest expense coverage ratio. Due to the impact of macroeconomic conditions and a softer demand environment on our business and results of operations, we entered into amendments to the Credit Agreement in February 2023, June 2023 and October 2023 to provide additional financial flexibility with respect to the financial covenants in the Credit Agreement. These amendments resulted in, among other things, an increase in the maximum leverage ratio, a decrease in the minimum interest ratio and also introduced a minimum liquidity covenant that applied through January 31, 2025. In the third quarter of fiscal year 2026, we voluntarily terminated the covenant relief period under the third amendment to the Credit Agreement. Following such termination, financial covenants reverted to levels where maintaining compliance will be more difficult. We were in compliance with all covenants as of January 25, 2026.
In response to adverse market demand conditions, management has taken actions to reduce expenses and maintain compliance with these financial covenants. Failure to meet the covenant requirements in the Credit Agreement would constitute an event of default under the Credit Agreement and there is no certainty we would be able to obtain waivers or amendments with the requisite lenders party thereto in order to maintain compliance. Other covenants in the Credit Agreement may also limit or restrict our ability to take certain actions to address our compliance with certain of the financial covenants in the Credit Agreement. Our ability to meet such financial covenants can also be affected by events beyond our control, and we may not be able to meet such financial covenants.
If an event of default occurs and we are unable to obtain necessary waivers or amendments, the requisite lenders may elect to declare all outstanding borrowings, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. Further, if an event of default occurs, the lenders will have the right to proceed against the collateral granted to them to secure that debt. If the debt under the Credit Agreement were to be accelerated, our assets may not be sufficient to repay in full that debt that may become due as a result of that acceleration. A default under the Credit Agreement or the acceleration of the debt thereunder could also lead to a default under the indentures governing our Notes (as defined below) and the agreements governing any indebtedness we may incur in the future, in which case our obligations under the Notes and any such indebtedness may also be accelerated and become immediately due and payable. We could seek replacement financing at prevailing market rates or raise additional capital by issuing equity or debt securities; however, this may not be on terms favorable to us, or available at all.
The accounting method for the Notes could adversely affect our financial condition and results.
We have adopted accounting guidance that simplifies the accounting for convertible debt that may be settled in cash. As a result, our 1.625% Convertible Senior Notes due 2027 (the "2027 Notes") and 0% Convertible Senior Notes due 2030 (the "2030 Notes" and, together with the 2027 Notes, the "Notes"), are recorded on our balance sheet at face value less unamortized debt issuance costs, with interest expense reflecting the cash coupon plus the amortization of the capitalized issuance costs. Additionally, we apply the if-converted method to the Notes in calculating earnings per share, which may reduce our reported diluted earnings per share.
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Furthermore, in the event the conditional conversion feature of the Notes is triggered, the holders of Notes are entitled to convert their Notes at any time during a specified period at their option. If one or more holders elect to convert their Notes, we would be required to settle any converted principal amount of such Notes through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we would be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. As of January 25, 2026, the trading price of our common stock remained above 130% of the applicable conversion price of the 2027 Notes for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, January 23, 2026 (the last trading day of the quarter ended January 25, 2026), resulting in the right of the holders of the 2027 Notes to convert their 2027 Notes beginning January 26, 2026 through April 24, 2026 (the last trading day of the fiscal quarter ending April 26, 2026). As of January 25, 2026, the 2030 Notes are not convertible at the option of the holders.
Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.
The conversion of some or all of the Notes may dilute the ownership interests of our stockholders. Upon conversion of the Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Notes being converted. If we elect to settle the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions, or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.
Certain provisions in the indentures governing the Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Certain provisions in the indentures governing the Notes may make it more difficult or expensive for a third party to acquire us. For example, the indentures governing the Notes generally require us, at the option of the holders, to repurchase the Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Notes in connection with a make-whole fundamental change, as defined in the indentures for the Notes. A takeover of us may trigger the requirement that we repurchase the Notes and/or increase the conversion rate, which could make it costlier for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
The Convertible Note Hedge Transactions and Warrants transactions may affect the trading price of our common stock.
On October 6, 2022 and October 19, 2022, we entered into privately negotiated convertible note hedge transactions (the "Convertible Note Hedges") with an affiliate of one of the initial purchasers of the 2027 Notes and another financial institution (collectively, the "Counterparties"). We also separately entered into privately negotiated warrant transactions (the "Warrants") with the Counterparties. The Convertible Note Hedges are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, as the case may be. However, the Warrants transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the Warrants.
In addition, the Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2027 Notes (and are likely to do in connection with any conversion of the 2027 Notes or redemption or repurchase of the 2027 Notes). This activity could cause or avoid an increase or a decrease in the market price of our common stock. We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of our common stock. In addition, we do not make any representation that the Counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
We are subject to counterparty risk with respect to the Convertible Note Hedges.
The Counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the Convertible Note Hedges. Our exposure to the credit risk of the Counterparties is not secured by any collateral. If a Counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Convertible Note Hedges with such Counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the
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volatility of our common stock. In addition, upon a default by a Counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock, and our Counterparties. We may not be financially stable or viable in the future.

Item 1B.    Unresolved Staff Comments
None.

Item 1C.    Cybersecurity
Risk Management and Strategy
As part of our overall enterprise risk management strategy, our cybersecurity processes seek to help the Company prevent or mitigate potential cybersecurity incidents, and to detect and remediate them quickly when they occur. To achieve this, the Company uses a broad selection of security tools and methodologies to assess, identify and manage material risks from cybersecurity threats.
Key aspects of our cybersecurity risk management and threat mitigation strategy include:
• Maintaining our ISO/IEC 27001:2022 certification and using it along with other common security frameworks to help assess, identify, and manage material risks from cybersecurity;
• Utilizing dedicated IT Security Operations and Product Security teams focused on monitoring, enforcing and improving cybersecurity throughout the enterprise;
• Engaging and training internal stakeholders from representative aspects of the business (product and functional teams) on our Incident Response and Reporting plan on a quarterly basis;
• Maintaining and regularly testing our disaster recovery and business continuity plans; and
• Creating information security awareness among our employees and partners through the use of phishing exercises and regular cyber-awareness articles & newsletter campaigns.
The Company evaluates our third-party vendors and service providers to ensure appropriate oversight and to identify any risks from cybersecurity threats associated with the use of their tools or services. To that end, as part of the onboarding process, our internal IT Security Operations team:
• Collects and evaluates self-certification information about each vendor’s cybersecurity program and external certifications;
• Reviews independent security reports that inform us about each vendor’s security posture and historical incidents; and
• Provides a timely evaluation of whether to move forward with the vendor’s engagement based on their cybersecurity risk profile.
As part of our processes, we also engage third parties and industry experts to conduct audits and other assessments of our cybersecurity system. These assessments include vulnerability assessments, penetration testing and table-top exercises. The results of these reviews help to identify areas for continued focus, improvement and/or compliance. We also regularly evaluate our cybersecurity position against benchmarks of our peers and industry leaders, and expect our strategy and management approach to change as the general cybersecurity landscape evolves.
Governance
Consistent with our overall risk management governance structure, the Vice President of IT Infrastructure and Security ("VP of IT Security") is responsible for the day-to-day management of cybersecurity risk, while our Board of Directors and its Audit Committee play an active, ongoing oversight role.
The Audit Committee or the full Board of Directors receive quarterly cybersecurity updates, which are prepared by our VP of IT Security. The report provides comprehensive cybersecurity updates, including topics such as security incidents, our threat landscape, compliance, key performance metrics and material risks, along with updates on general cybersecurity project execution.
The VP of IT Security works directly with the IT Security Operation Team and the Product Security Team to ensure effective and timely monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents. In line with our incident response plan, the VP of IT Security informs executive management regarding cybersecurity risks and incidents and provides regular updates about cybersecurity incidents to the Board, the Chief Operating Officer and other members of the executive management team as well as to the Audit Committee and the Board of Directors, as appropriate.
Our VP of IT Security has held IT security and leadership roles at the Company for over 25 years and maintains a wide range of industry certifications including Certified Information Systems Security Professional.
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As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. However, we can give no assurance that we have detected or protected against all cybersecurity threats or incidents. For additional information on our cybersecurity risks, see "Item 1A. Risk Factors – We rely on certain critical information systems for the operation of our business and a disruption in our information systems, including those related to cybersecurity, could adversely affect our business operations."

Item 2.    Properties
Our corporate headquarters is located in Camarillo, California where we own an approximately 88,000 square foot facility. The parcel on which our headquarters is located can accommodate substantial expansion. As of January 25, 2026, we owned or leased multiple properties. The locations and primary functions of significant properties are summarized in the following table:

Locations Square Feet Administration Research and/or development Manufacturing support Sales and marketing Application engineering Test and assembly Reliability testing Leased
Camarillo, California 88,000  ● ● ● ● ● ●
Colorado Springs, Colorado 51,588  ● ● ● ● ● ●
San Jose, California 39,050  ● ● ● ● ● ● ●
Colorado Springs, Colorado 25,967  ● ● ● ● ● ● ●
Irvine, California 20,072  ● ● ● ● ● ●
San Diego, California 18,189  ● ● ● ● ● ●

Richmond, British Columbia, Canada 76,000  ● ● ● ● ● ● ●
Burlington, Ontario, Canada 68,000  ● ● ● ● ● ●
Neuchatel, Switzerland 37,275  ● ● ● ● ● ● ● ●
Taipei, Taiwan 36,720  ● ● ●
Pune, India 30,100  ● ●
Kanata, Ontario, Canada 29,221  ● ● ● ● ●
Rapperswil, Switzerland 17,760  ● ●
Bristol, United Kingdom 17,430  ● ● ● ● ● ● ●
Shenzhen, China 15,678  ● ● ● ●

In addition to the properties listed in the above table, we also lease Sales and Marketing, Research and Development, and Administrative offices at various locations in the U.S. and internationally under operating leases, none of which are material to our future cash flows. Our leases expire at various dates through 2033.
We believe that our existing leased and owned space is more than adequate for our current operations, and that suitable replacement and additional space will be available in the future on commercially reasonable terms as circumstances warrant.

Item 3.     Legal Proceedings
A description of our material legal proceedings in Note 13, Commitments and Contingencies, to the Consolidated Financial Statements is incorporated by reference into this Item 3.

Item 4.     Mine Safety Disclosures
Not applicable.
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PART II

Item 5.     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on The Nasdaq Global Select Market under the symbol "SMTC."
Holders
As of March 20, 2026, we had 191 hold ers of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.
Dividends
The payment of dividends on our common stock is within the discretion of our Board of Directors. Currently, we intend to retain earnings to finance the growth of our business. We did not pay cash dividends on our common stock during fiscal years 2026, 2025 or 2024, and our Board of Directors has not indicated an intent to declare a cash dividend on our common stock in the foreseeable future.
Issuer Purchases of Equity Securities
We maintain a stock repurchase program that was initially approved by our Board of Directors and announced by us in March 2008. The stock repurchase program does not have an expiration date and our Board of Directors has authorized expansion of the program over the years. On March 11, 2021, our Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. We did not repurchase any shares of our common stock under the program during fiscal year 2026 . As of January 25, 2026, the remaining authorization under the program was $209.4 million. Under the program, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions. To the extent we repurchase any shares of our common st ock under the program in the future, w e expect to fund such repurchases from cash on hand and borrowings on our Revolving Credit Facility (as defined below). We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Sales of Unregistered Securities
We did not make any sales of unregistered securities during fiscal year 2026 that have not been previously reported.
Performance Graph
This chart and graph show the value of a $100 cash investment at the close of market on the last trading day of fiscal year 2021 in (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Philadelphia Semiconductor Index ("PHLX"), and assumes that all dividends are reinvested. Note that historic stock price performance is not necessarily indicative of future stock price performance.

Fiscal Year 2021 2022 2023 2024 2025 2026
Semtech $ 100  $ 96  $ 47  $ 29  $ 103  $ 113 
Nasdaq Composite Index $ 100  $ 105  $ 89  $ 118  $ 153  $ 180 
PHLX $ 100  $ 114  $ 102  $ 150  $ 185  $ 276 

The information contained in this Item 5 under the heading "Performance Graph" (i) is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and (ii) shall not be incorporated by reference into any registration statement or other document pursuant to the Exchange Act, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing to this Item 5 Performance Graph information.

Item 6.    [Reserved]

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Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and operating results should be read in conjunction with our Consolidated Financial Statements and related Notes included in Item 8 of this Annual Report on Form 10-K. See also "Special Note Regarding Forward Looking and Cautionary Statements" at the beginning of this Annual Report on Form 10-K.

Overview
We are a leading provider of high-performance semiconductors powering data center networking, IoT connectivity and cellular infrastructure 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. The 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 and has expanded to support AI-driven applications and general compute data center applications. The high-end consumer end market includes smartphones, tablets, smart glasses, wearables, desktops, notebooks and other consumer equipment. The 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 2026, 2025 and 2024 each consisted of 52 weeks. Our fiscal year 2027 will consist of 53 weeks.
We remain committed to advancing our role as a leading provider of disruptive platforms that enable our customers to deliver solutions to create a smarter planet. We continue to focus on three secular trends that drive our growth strategy:
1. Enabling a smarter, more sustainable planet through IoT solutions;
2. Addressing the demand for higher bandwidth and performance with lower power consumption; and
3. Supporting greater mobility in an increasingly connected world.
The increasing adoption of our LoRa technology 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 rapid expansion of AI workloads 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, and industry demand within hyperscale data centers has continued to expand to support both AI-driven and general compute applications.
The trend toward adoption of finer silicon geometries has accelerated across all categories of end systems, making them increasingly vulnerable to electrical and electromagnetic threats. Our protection solutions, which enable the highest levels of system performance, have found increased adoption across the board, driven by the need to maintain product functionality despite the challenging threat environment (electrical and electromagnetic), and increased system sensitivity to threats due to adoption of finer silicon geometries for implementation of system functions. Finally, the increasing demand for smaller, lower-powered higher performance mobile platforms with more enjoyable organic light-emitting diode displays has benefited our protection and proximity sensing solutions that protect these mobile devices and help our customers comply with radio frequency absorption regulations.
We 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, 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.
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Recent Developments
Financing
On October 10, 2025, the Company issued and sold $402.5 million in aggregate principal amount of 0% Convertible Senior Notes due 2030 (the "2030 Notes") in a private placement. The 2030 Notes were issued pursuant to an indenture, dated October 10, 2025, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (the "2030 Indenture"). The 2030 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement (as defined below). The 2030 Notes do not bear any interest and will mature on October 15, 2030, unless earlier converted, redeemed or repurchased. As of January 25, 2026, $402.5 million of the 2030 Notes remain outstanding. For additional information, see Note 9, Long-Term Debt, to our Consolidated Financial Statements.
On October 7, 2025, the Company entered into separate, privately-negotiated exchange agreements with certain holders of the 2027 Notes (the "2025 Exchange of 2027 Notes"). Pursuant to the 2025 Exchange of 2027 Notes, on October 14, 2025, the Company used approximately $220.6 million of the net proceeds from the 2030 Notes, together with the issuance of 3,036,192 shares of the Company's common stock as consideration for the exchange of approximately $219.0 million aggregate principal amount of the 2027 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In fiscal year 2026, in connection with these exchange transactions, the Company recognized an induced conversion expense of $17.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $14.3 million on the Balance Sheets, which included $3.3 million from the write-off of deferred financing costs.
In connection with the 2025 Exchange of 2027 Notes, the Company also terminated a portion of the Convertible Note Hedges (as defined below) 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 7, 2025, the Company entered into separate, privately-negotiated exchange agreements with holders of the 2028 Notes (as defined below) (the "2025 Exchange of 2028 Notes"). Pursuant to the 2025 Exchange of 2028 Notes, on October 14, 2025, the Company used approximately $63.1 million of the net proceeds from the 2030 Notes, together with the issuance of 2,217,394 shares of the Company's common stock as consideration for the exchange of the remaining $62.0 million aggregate principal amount of the 2028 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In fiscal year 2026, in connection with these exchange transactions, the Company recognized an induced conversion expense of $3.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $2.2 million on the Balance Sheets, which included $1.3 million from the write-off of deferred financing costs.
Impact of Macroeconomic Conditions
In recent periods, macroeconomic factors such as market volatility, inflationary pressures, elevated interest rates, geopolitical tensions and recessionary concerns have caused uncertainty in end customer demand, which resulted in elevated channel inventories. We believe that we can continue to take appropriate actions to align our inventory levels with anticipated customer demand profiles.
Our Segments
We have three operating segments—Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity—that represent three separate reportable segments. See Note 15, Segment Information, to our Consolidated Financial Statements for segment information.
Factors Affecting Our Performance
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. Net sales made through independent distributors in fiscal years 2026, 2025 and 2024 were 74%, 72% and 66%, 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 for fiscal years 2026, 2025 and 2024 constituted approximately 82%, 79% and 76%, respectively, of our net sales. Approximately 67%, 64% and 58% of net sales in fiscal years 2026, 2025 and 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.
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We use several metrics as indicators of future potential growth. The indicators that we believe best correlate to potential future sales growth are design wins and new product releases. There are many factors that may cause a design win or new product release to not result in sales, including a customer decision not to go to system production, a change in a customer’s perspective regarding a product’s value or a customer’s product failing in the end market. As a result, although a design win or new product introduction is an important step towards generating future sales, it does not necessarily result in us being awarded business or receiving a purchase commitment.
Inflationary factors could affect our future performance if we are unable to pass higher costs on to our customers.
Revenue
We derive our revenue primarily from the sale of our products into various end markets. Revenue is recognized when control of these products is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for these products. Control is generally transferred when products are shipped and, to a lesser extent, when the products are delivered.
Cloud and connectivity services, reported in our IoT Systems and Connectivity segment, are provided on either a subscription or consumption basis. Revenue related to cloud and connectivity services provided on a subscription basis is recognized ratably over the contract period. Revenue related to cloud and connectivity services provided on a consumption basis is recognized based on the customer utilization of such resources. Revenues from SIM activation and initial application setup are deferred and recognized over the estimated customer life on a straight-line basis. Licenses for on-premise software provide the customer with a right to use the software as it exists when made available to the customer. Revenue from distinct on-premise licenses are recognized upfront at the point in time when the software is made available to the customer. Revenue from software maintenance, unspecified upgrades and technical support contracts are recognized over the period such items are delivered or services are provided. Revenue from technical support contracts extending beyond the current period is deferred and is recognized over the applicable earning period.
Recovery of costs associated with product design and engineering services are recognized during the period in which services are performed and are reported as a reduction to product development and engineering expense. Historically, these recoveries have not exceeded the cost of the related development efforts. We include revenue related to granted technology licenses as part of "Net sales" in the Statements of Operations. Historically, revenue from these arrangements has not been significant though it is part of our recurring ordinary business.
We determine revenue recognition through the following five steps:
• Identification of the contract, or contracts, with a customer
• Identification of the performance obligations in the contract
• Determination of the transaction price
• Allocation of the transaction price to the performance obligations in the contract
• Recognition of revenue when, or as, performance obligations are satisfied
We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
Our customer contracts can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Net sales reflect the transaction prices for contracts, which include units shipped at selling prices reduced by variable consideration. Determination of variable consideration requires judgment by us. Variable consideration includes expected sales returns and other price adjustments. Variable consideration is estimated using the expected value method considering all reasonably available information, including our historical experience and our current expectations, and is reflected in the transaction price when sales are recorded. Sales returns are generally accepted at our discretion or from distributors with such rights. Our contracts with trade customers do not have significant financing components or non-cash consideration. We record net sales excluding taxes collected on our sales to our trade customers.
We provide an assurance type warranty, which is typically not sold separately and does not represent a separate performance obligation. Our payment terms are generally aligned with shipping terms.
Gross Profit
Gross profit is equal to our net sales less our cost of sales. Our cost of sales includes materials, depreciation on fixed assets used in the manufacturing process, shipping costs, direct labor and overhead, cellular carrier charges, as well as amortization of acquired technology and acquired technology impairments. The majority of our manufacturing is outsourced, resulting in relatively low fixed manufacturing costs and variable costs that highly correlate with volume. We determine the cost of inventory by the first-in, first-out method.
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Operating Costs and expenses, net
Our operating costs and expenses generally consist of product development and engineering costs, selling, general and administrative, costs associated with acquisitions, restructuring charges, and other operating related charges.

Results of Operations
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 28, 2024 and year-over-year comparisons between fiscal years 2025 and 2024 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 26, 2025 , filed with the SEC on March 25, 2025.
Fiscal Year 2026 Compared with Fiscal Year 2025
Net Sales
The following table summarizes our net sales by major end market:

Fiscal Years
(in thousands, except percentages) 2026 2025
Net Sales % Net Sales Net Sales % Net Sales Change
Infrastructure $ 310,432  30  % $ 243,772  27  % 27  %
High-End Consumer 155,067  15  % 147,021  16  % 5  %
Industrial 584,476  55  % 518,494  57  % 13  %

Total $ 1,049,975  100  % $ 909,287  100  % 15  %

Net sales for fiscal year 2026 were $1,050.0 million, an increase of 15% compared to $909.3 million for fiscal year 2025 primarily driven by higher net sales across all major end markets, particularly from our infrastructure and industrial end markets due to stronger demand and increased sales volume. Net sales from our infrastructure end market increased $66.7 million versus the prior year driven by an approximately $81.4 million increase in data center sales and an approximately $4.7 million increase in infrastructure TVS product sales, partially offset by an approximately $20.0 million decrease in telecommunications sales. 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 $8.0 million primarily driven by an increase in consumer TVS product sales.
The following table summarizes our net sales by reportable segment:

Fiscal Years
(in thousands, except percentages) 2026 2025
Net Sales % Net Sales Net Sales % Net Sales Change
Signal Integrity $ 322,608  31  % $ 261,747  29  % 23  %
Analog Mixed Signal and Wireless
373,444  36  % 322,899  35  % 16  %

IoT Systems and Connectivity 353,923  33  % 324,641  36  % 9  %
Total $ 1,049,975  100  % $ 909,287  100  % 15  %

Net sales from Signal Integrity increased $60.9 million in fiscal year 2026 versus fiscal year 2025 primarily driven by an approximately $81.4 million increase in data center sales, partially offset by an approximately $20.0 million decrease in telecommunications sales. Net sales from Analog Mixed Signal and Wireless increased $50.5 million in fiscal year 2026 versus fiscal year 2025 primarily due to an approximately $39.8 million increase in LoRa-enabled sales and approximately $17.3 million increase in total TVS product sales, both driven by stronger demand. Net sales from IoT Systems and Connectivity increased $29.3 million in fiscal year 2026 versus fiscal year 2025 primarily due to an approximately $34.3 million increase in IoT Hardware sales, driven by stronger demand.
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Gross Profit
The following table summarizes our gross profit and gross margin by reportable segment:

Fiscal Years
(in thousands, except percentages) 2026 2025
Gross Profit Gross Margin Gross Profit Gross Margin
Signal Integrity $ 210,347  65.2  % $ 162,656  62.1  %
Analog Mixed Signal and Wireless 219,986  58.9  % 179,372  55.6  %

IoT Systems and Connectivity 125,743  35.5  % 127,561  39.3  %
Unallocated costs, including share-based compensation, amortization of acquired technology and acquired technology impairments (13,932) (13,061)
Total $ 542,144  51.6  % $ 456,528  50.2  %

In fiscal year 2026, gross profit increased to $542.1 million from $456.5 million in fiscal year 2025. This increase was primarily due to $47.7 million increase from Signal Integrity primarily driven by higher data center sales due to stronger demand, partially offset by lower telecommunications sales, a $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, partially offset by a $1.8 million decrease from IoT Systems and Connectivity.
Our gross margin was 51.6% in fiscal year 2026, compared to 50.2% in fiscal year 2025. Gross margin in Signal Integrity was 65.2% in fiscal year 2026 , compared to 62.1% in fiscal year 2025 primarily due to improved overhead absorption and favorable product mix. G ross margin in Analog Mixed Signal and Wireless was 58.9% in fiscal year 2026 , compared to 55.6% in fiscal year 2025 primarily due to favorable product mix. Gross margin in IoT Systems and Connectivity was 35.5% in fiscal year 2026, compared to 39.3% in fiscal year 2025 primarily due to unfavorable product mix.
Operating Expenses, net

Fiscal Years
(in thousands, except percentages) 2026 2025
Cost/Exp. % Net Sales Cost/Exp. % Net Sales Change
Product development and engineering $ 196,348  19  % $ 170,908  19  % 15  %
Selling, general and administrative 221,852  21  % 222,368  24  % —  %
Intangible amortization 631  —  % 884  —  % (29) %
Restructuring 4,186  1  % 4,944  1  % (15) %

Intangible impairments 1,777  —  % —  —  % 100  %
Goodwill impairment 84,785  8  % 7,490  1  % 1,032  %
Total operating expenses, net $ 509,579  49  % $ 406,594  45  % 25  %

Product Development and Engineering Expenses
Product development and engineering expenses increased $25.4 million for fiscal year 2026 compared to fiscal year 2025 primarily as a result of a $16.0 million net increase in staffing-related costs, including higher supplemental compensation, a $7.8 million increase from new product introduction expenses, and a $2.1 million increase in facilities, 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 & Administrative ("SG&A") Expenses
Selling, general and administrative expenses decrease d $0.5 million for fiscal year 2026 compared to fiscal year 2025 primarily as a result of a $7.7 million net decrease in staffing-related costs driven by lower share-based compensation caused by remeasurement of the cash-settled awards liability, partially offset by a $3.4 million increase in consulting expenses, a $1.8 million increase in bad debt reserve expense, a $1.6 million increase in transaction and integration related expenses, and a $0.3 million increase in facilities.
Intangible Amortization
Intangible amortization was $0.6 million and $0.9 million for fiscal years 2026 and 2025, respectively. The amortization of acquired technology intangible assets is reflected in cost of sales.
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Restructuring Expenses
Restructuring expenses were $4.2 million and $4.9 million for fiscal years 2026 and 2025, respectively, from structural reorganization actions to reduce our workforce as a result of cost-saving measures and internal resource alignment.
Intangible Impairments
There was $1.8 million of intangible impairment in fiscal year 2026. There was no intangible impairment in fiscal year 2025.
Goodwill Impairment
There was $84.8 million of goodwill impairment for fiscal year 2026 primarily due to reduced earnings forecasts and a shift in strategic direction associated with the IoT Connected Services reporting unit. There was no goodwill impairment at any of the Company's other reporting units.
Goodwill impairment was $7.5 million for fiscal year 2025 primarily due to reduced earnings forecasts associated with the IoT Systems–Modules reporting unit. There was no goodwill impairment at any of the Company's other reporting units.
See Note 7, Goodwill and Intangible Assets, to our Consolidated Financial Statements for additional information.
Interest Expense
Interest expense, including amortization and a write-off of deferred financing costs, was $40.6 million and $90.1 million for fiscal years 2026 and 2025, respectively. The $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, and the full repayment of the Revolving Credit Facility (as defined below) and Term Loans (as defined below) from the fourth quarter of fiscal year 2025 through the third quarter of fiscal year 2026, partially offset by the induced conversion expense of $21.2 million in connection with the 2025 Exchange of 2027 Notes and 2025 Exchange of 2028 Notes.
See Note 9, Long-Term Debt, to our Consolidated Financial Statements for additional information.
Investment Impairments and Credit Loss Reserves
In fiscal year 2026, investment impairments and credit loss reserves totaled a loss of $10.4 million due to an other-than-temporary impairment on one of our non-marketable equity investments and AFS debt securities. In fiscal year 2025, investment impairments and credit loss reserves totaled a loss of $1.1 million due to an other-than-temporary impairment on one of our non-marketable equity investments.
Provision for Income Taxes
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. The effective tax rates for fiscal years 2026 and 2025 were (93.6%) and 12.0%, respectively. Our effective tax rate for fiscal year 2026 differs from the statutory federal income tax rate of 21% primarily due to our regional mix of income, changes in valuation allowance, nondeductible losses on debt extinguishment 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.
On July 4, 2025, the 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 January 25, 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 its 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 year ending January 25, 2026.
Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized. In making such a determination of whether a valuation is necessary, we consider all available positive and negative evidence supporting the allowance (e.g., the results of recent operations and future forecasts). As a result of our recent performance, there is a reasonable possibility that a portion of our valuation allowance is no longer needed in future periods. A release of the valuation allowance will likely result in a material tax benefit recognized in the quarter of the release.
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We historically benefited from a Swiss tax holiday that commenced on January 30, 2017. However, Switzerland implemented the OECD Pillar Two rules effective from January 1, 2024. Based on the administrative guidance issued by OECD in December 2023, we have determined that Pillar Two rules are applicable starting in fiscal year 2025; therefore, we do not benefit from the tax holiday from fiscal year 2025 onwards.
As a global organization, we are subject to audit by taxing authorities in various jurisdictions. To the extent that an audit, or the closure of a statute of limitations results in adjusting our reserves for uncertain tax positions, our effective tax rate could experience extreme volatility since any adjustment would be recorded as a discrete item in the period of adjustment.
For further information on the effective tax rate and the Tax Act’s impact, see Note 11, Income Taxes, to our Consolidated Financial Statements.

Liquidity and Capital Resources
Our capital requirements depend on a variety of factors including, but not limited to, the rate of increase or decrease in our existing business base; the success, timing and amount of investment required to bring new products to market; sales growth or decline; potential acquisitions or divestitures; the general economic environment in which we operate; and our ability to generate cash flows from operating activities.
We believe that our cash on hand, expected cash generation from future operations and available borrowing capacity under 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 25, 2026, we had $195.2 million in cash and cash equivalents and $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 $3.4 million outstanding under letters of credit under the 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 January 25, 2026, our foreign subsidiaries held $182.7 million of cash and cash equivalents, compared to $139.1 million at January 26, 2025. Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see "Item 7A - Quantitative and Qualitative Disclosures About Market Risk."
In connection with the enactment of the Tax Act, 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 January 25, 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 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 foreign earnings for fiscal years 2026 and 2025 will be permanently reinvested. 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.
We expect our future non-operating uses of cash will be for capital expenditures and debt repayment . We expect to fund these cash requirements through cash flows from operating activities.
Expected Sources and Uses of Liquidity
Operating Cash Flows
Our operating cash flows are driven by our ability to value price for the differentiated technology that we provide, as well as our fab-lite business model, which is highly flexible to changes in customer demand.
Credit Agreement
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, we entered into a third amendment and restatement 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.
On April 24, 2025, we entered into the fourth amendment (the "Fourth Amendment") to the Credit Agreement, in order to, among other things, increase the total available borrowing capacity under the revolving credit facility under the Credit Agreement (the "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 Credit Agreement remain unchanged.
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After effectiveness of the Fourth Amendment, the borrowing capacity on the Revolving Credit Facility is $455.0 million, which is 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).
As of January 25, 2026 , the Company had no amounts outstanding under the Term Loans and no revolving loans outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $451.6 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
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. 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.
As of January 25, 2026 , the Company was in compliance with the financial covenants in our Credit Agreement. The Credit Agreement also contains customary provisions pertaining to events of default. If any event of default occurs, the obligations under the Credit Agreement may be declared due and payable, terminated upon written notice to us and existing letters of credit may be required to be cash collateralized.
For additional information on the Credit Agreement, see Note 9, Long-Term Debt to our Consolidated Financial Statements.
We had entered into interest rate swap agreements to hedge the variability of interest payments on debt outstanding under the Term Loans. As of January 25, 2026 , there were no interest rate swap agreements outstanding. See Note 18, Derivatives and Hedging Activities, to our Consolidated Financial Statements for additional information.
Convertible Senior Notes Due 2027
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 January 25, 2026 , 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, January 23, 2026 (the last trading day of the quarter ended January 25, 2026), resulting in the right of the holders of the 2027 Notes to convert their 2027 Notes beginning January 26, 2026 through April 24, 2026 (the last trading day of the fiscal quarter ending April 26, 2026). Should the holders of the 2027 Notes elect to convert some or all of the outstanding 2027 Notes, the Company intends to draw on its Revolving Credit Facility to settle the obligation. As of January 25, 2026, $100.5 million of the 2027 Notes remained outstanding. 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 Hedge Transactions (as defined in Note 9, Long-Term Debt), 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 described in Note 9, Long-Term Debt to our Consolidated Financial Statements. The Convertible Note Hedge Transactions 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" in the consolidated statement of stockholders’ equity (deficit). 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 Convertible Note Hedges and the Warrants, see Note 9, Long-Term Debt to our Consolidated Financial Statements.
On October 7, 2025, the Company entered into the 2025 Exchange of 2027 Notes. Pursuant to the 2025 Exchange of 2027 Notes, on October 14, 2025, the Company used approximately $220.6 million of the net proceeds from the 2030 Notes, together with the issuance of 3,036,192 shares of the Company's common stock as consideration for the exchange of approximately $219.0 million aggregate principal amount of the 2027 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In fiscal year 2026, in connection with these exchange transactions, the Company recognized an induced conversion expense of $17.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $14.3 million on the Balance Sheets, which included $3.3 million from the write-off of deferred financing costs.
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In connection with the 2025 Exchange of 2027 Notes, the Company also terminated a portion of 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.
Convertible Senior Notes Due 2028
On October 26, 2023, we issued and sold $250.0 million in aggregate principal amount of the 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 bear 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.
On July 11, 2024 and July 15, 2024, we entered into the Exchange Agreements with certain holders of the 2028 Notes. Pursuant to the Exchange Agreements, certain holders of the 2028 Notes exchanged with us approximately $188.1 million in aggregate principal amount of 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024. We accounted for these exchange transactions as a partial debt extinguishment and recognized a loss on extinguishment of debt equal to the difference between the fair value of our common stock delivered to certain holders of the 2028 Notes and the carrying value of the outstanding debt, accrued interest and third-party fees related to the Exchange Agreements. In fiscal year 2025 , in connection with these exchange transactions, we recognized $144.7 million of loss included in "Loss on extinguishment of debt" in the Statements of Operations and $5.5 million of loss resulting from the write-off of deferred financing costs included in "Interest expense" in the Statements of Operations.
On October 7, 2025, the Company entered into the 2025 Exchange of 2028 Notes. Pursuant to the 2025 Exchange of 2028 Notes, on October 14, 2025, the Company used approximately $63.1 million of the net proceeds from the 2030 Notes, together with the issuance of 2,217,394 shares of the Company's common stock as consideration for the exchange of the remaining $62.0 million aggregate principal amount of the 2028 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In fiscal year 2026, in connection with these exchange transactions, the Company recognized an induced conversion expense of $3.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $2.2 million on the Balance Sheets, which included $1.3 million from the write-off of deferred financing costs.
For additional information on the 2028 Notes, see Note 9, Long-Term Debt to our Consolidated Financial Statements.
Convertible Senior Notes Due 2030
On October 10, 2025, the Company issued and sold $402.5 million in aggregate principal amount of 2030 Notes in a private placement. The 2030 Notes were issued pursuant to the 2030 Indenture. The 2030 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement. The 2030 Notes do not bear any interest and will mature on October 15, 2030, unless earlier converted, redeemed or repurchased. The 2030 Notes are not currently redeemable and, as of January 25, 2026, none of the conditions allowing holders of the 2030 Notes to convert had been met. As of January 25, 2026, $402.5 million of the 2030 Notes remain outstanding.
For additional information on the 2030 Notes, see Note 9, Long-Term Debt to our Consolidated Financial Statements.
Capital Expenditures and Research and Development
We incur significant expenditures in order to fund the development, design and manufacture of new products. We intend to continue to focus on those areas that have shown potential for viable and profitable market opportunities, which may require additional investment in equipment and the hiring of additional design and application engineers aimed at developing new products. Certain of these expenditures, particularly the addition of design engineers, do not generate significant payback in the short-term. We plan to finance these expenditures with cash generated by our operating activities, our existing cash balances and additional draws on our Revolving Credit Facility, as needed. Borrowings under our Revolving Credit Facility are subject to customary conditions precedent, including the accuracy of representations and warranties and the absence of any defaults under the facility.
Portfolio Rationalization
We are conducting a portfolio rationalization review, which has included identifying non-core assets in an effort to align our portfolio with our strategic vision and preferred margin profile. As part of the portfolio rationalization review, we are reviewing potential strategic alternatives for certain of our non-core assets. No decision has been made regarding any strategic alternative
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or any particular asset and there is no assurance that the exploration of strategic alternatives will result in any transactions, nor any specified timeline.
Purchases under our Stock Repurchase Program
We currently have in effect a stock repurchase program that was initially approved by our Board of Directors in March 2008. On March 11, 2021, our Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. This program represents one of our principal efforts to return value to our stockholders. Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions.
We did not repurchase any shares of our common stock under the program during fiscal years 2026 and 2025. As of January 25, 2026, the remaining authorization under the program was $209.4 million . To the extent we repurchase any shares of our common st ock under the program in the future, w e expect to fund such repurchases from cash on hand and borrowings on our Revolving Credit Facility. We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Operating Leases
We have operating leases for real estate, vehicles, and office equipment with remaining lease terms of up to eight years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Our operating lease liabilities totaled $26.8 million and $24.5 million as of January 25, 2026 and January 26, 2025, respectively, and are included in "Accrued liabilities" and "Other long-term liabilities" in our Consolidated Balance Sheets.
Purchase Commitments
Capital purchase commitments and other open purchase commitments are for the purchase of plant, equipment, raw materials, supplies and services. They are not recorded liabilities in our Consolidated Balance Sheets as of January 25, 2026, as we have not yet received the related goods or taken title to the goods or received services. As of January 25, 2026, we had $6.1 million in open capital purchase commitments and $408.1 million in other open purchase commitments.
Compensation and Defined Benefit Plans
We maintain a deferred compensation plan for certain key employees that allow participants to defer a portion of their compensation for future distribution at various times permitted by the plan. Our liabilities for deferred compensation under this plan were $46.1 million and $39.3 million as of January 25, 2026 and January 26, 2025, respectively, and are included in "Accrued liabilities" and "Other long-term liabilities" in the Consolidated Balance Sheets. The plan provides for a discretionary Company match up to a defined portion of the employee’s deferral, with any match subject to defined conditions.
We have purchased whole life insurance on the lives of certain of our current and former deferred compensation plan participants. This corporate-owned life insurance is held in a grantor trust and is intended to cover a majority of the costs of our deferred compensation plan. The cash surrender value of our corporate-owned life insurance was $46.2 million as of January 25, 2026 and was included in "Other assets" in the Consolidated Balance Sheets, compared to $34.9 million as of January 26, 2025 included in "Other assets" in the Consolidated Balance Sheets. The $11.2 million increase in the cash surrender value of the corporate-owned life insurance as of January 25, 2026 compared to January 26, 2025 was primarily related to an overall $7.8 million increase in market value reflected in earnings and $3.4 million premium deposited to the corporate-owned life insurance.
We maintain defined benefit pension plans for the employees of our Swiss and French subsidiaries. Expected future payments under these plans totaled $34.7 million as of January 25, 2026.
The liability associated with vested, but unsettled restricted stock awards that are to be settled in cash totaled $11.3 million as of January 25, 2026, of which $7.5 million was included in "Other long-term liabilities" and $3.8 million was included in "Accrued liabilities" in the Balance Sheets , compared to $14.5 million as of January 26, 2025 , of which $6.2 million was included in "Other long-term liabilities" and $8.3 million w as included in "Accrued liabilities" in the Balance Sheets.
Working Capital
Working capital, defined as total current assets less total current liabilities including the current portion of long-term debt, fluctuates depending on end-market demand and our effective management of certain items such as receivables, inventory and payables. In times of escalating demand, our working capital requirements may increase as we purchase additional manufacturing materials and increase production. In addition, our working capital may be affected by potential acquisitions and transactions involving our debt instruments. Although investments made to fund working capital will reduce our cash balances, these investments are necessary to support business and operating initiatives.
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Cash Flows
In summary, our cash flows for each period were as follows:

Fiscal Years
(in thousands) 2026 2025
Net cash provided by operating activities $ 181,168  $ 57,987 
Net cash used in investing activities (38,761) (11,887)
Net cash used in financing activities (101,068) (21,660)
Effect of foreign exchange rate changes on cash and cash equivalents 2,097  (1,282)
Net increase in cash and cash equivalents $ 43,436  $ 23,158 

Operating Activities
Net cash provided by operating activities is driven by net income or loss adjusted for non-cash items and fluctuations in operating assets and liabilities.
Operating cash flows for fiscal year 2026 compared to fiscal year 2025 were favorably impacted by a 15.5% increase in net sales, significantly lower interest payments on debt, and lower restructuring payments related to employee termination benefits, and were unfavorably impacted by an increase in annual bonus payments and a $12.0 million incremental increase in inventory spend.
Investing Activities
Net cash used in investing activities is primarily driven by acquisitions, net of any cash received, capital expenditures, purchases and sales of investments, proceeds from or premiums paid for corporate-owned life insurance, proceeds from sales of property, plant and equipment, and purchases of intangibles.
In fiscal year 2026, we completed an immaterial acquisition for cash consideration of $21.5 million. No similar acquisitions were made in fiscal year 2025.
Capital expenditures were $9.8 million and $7.9 million in fiscal years 2026 and 2025, respectively.
Purchases of intangibles were $6.0 million for fiscal year 2026, compared to $6.3 million for fiscal year 2025, which included capitalized development costs and software licenses.
Financing Activities
Net cash used in financing activities is primarily attributable to proceeds from and payments on our Revolving Credit Facility, proceeds from and payments on our Term Loans, proceeds from and payments of convertible senior notes, repurchase of warrants, proceeds from unwind of bond hedge, purchase of capped calls, payments related to deferred financing costs, issuance of common stock, proceeds from interest rate swap termination and stock option exercises, payments related to employee share-based compensation payroll taxes and distributions to noncontrolling interest.
In fiscal years 2026 and 2025, we made prepayments of $181.2 million and $441.4 million on our Term Loans, respectively.
In fiscal year 2026, we collected proceeds of $402.5 million from and made prepayments of $281.0 million on our convertible senior notes, as discussed above. No such proceeds were collected or no such prepayments were made in fiscal year 2025.

Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities. Accordingly, actual results could differ materially from our estimates. We consider an accounting policy to be a "critical accounting policy and estimate" if: (1) we must make assumptions that were uncertain when the judgment was made, and (2) changes in the estimate assumptions or selection of a different estimate methodology could have a significant impact on our financial position and the results that we report in our consolidated financial statements. While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information available when the estimate was made. We believe the following represent our most significant accounting estimates:
• Inventories  - We value our inventory at the lower of cost or net realizable value, which requires us to make estimates regarding potential obsolescence or lack of marketability. We reduce the basis of our inventory due to changes in demand or changes in product life cycles. The estimation of customer demand requires management to evaluate and make assumptions of the impact of changes in demand or changes in product life cycles on current sales levels. Our write-down to net realizable value at the end of fiscal year 2026 and 2025 represented 29.6% and 34.5% of gross inventory, respectively. Based on fiscal year 2026 ending inventory, an increase in the write-down by one percent of gross inventory would decrease net inventory and increase cost of goods sold by $2.8 million.
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• Revenue recognition - Net sales reflect the transaction prices for contracts, which include units shipped at selling prices reduced by variable consideration. Determination of variable consideration requires judgment by us and includes expected sales returns and other price adjustments. Variable consideration is estimated using the expected value method considering all reasonably available information, including our historical experience and our current expectations, and is reflected in the transaction price when sales are recorded. In fiscal year 2026 , net sales were reduced by $61.6 million in estimated variable consideration, or 5.5% of gross revenue. In fiscal year 2025 , net sales were reduced by $54.2 million in estimated variable consideration, or 5.6% of gross revenue. If variable consideration were estimated to be one percent higher, fiscal year 2026 revenue would have decreased by $11.1 million.
• Income taxes  - We make certain estimates and judgements in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes. We assess the likelihood of the realization of deferred tax assets and record a corresponding valuation allowance as necessary if we determine those deferred tax assets may not be realized due to the uncertainty of the timing and amount to be realized. For example, we have valuation allowance against federal, state and certain foreign deferred tax assets in jurisdictions where we have cumulative losses or otherwise are not expected to utilize certain tax attributes. In reaching our conclusion, we evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require material adjustments to these deferred tax assets, which may result in an increase or decrease to our income tax provision in future periods.
We account for uncertain tax positions by first determining if it is "more likely than not" that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. For those tax positions where it is more likely than not that a tax position will be sustained, we have recorded the tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We classify interest and penalties related to uncertain tax positions within the provision for (benefit from) income taxes line of the Consolidated Statements of Income. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in known facts or circumstances, changes in tax law, effectively settled issues under audit, and new guidance on legislative interpretations. A change in these factors could result in the recognition of an increase or decrease to our income tax provision, which could materially impact our consolidated financial position and results of operations.
In the ordinary course of global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of cost reimbursement among related entities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our historical income tax provisions and income tax liabilities. In the event our assumptions are incorrect, the differences could have a material impact on our income tax provision and operating results in the period in which such determination is made. In addition to the factors described above, our current and expected effective tax rate is based on then-current tax law. Significant changes during the year in enacted tax law could affect these estimates.
See Note 11, Income Taxes, of the Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K for further discussion.
• Business Combinations, Goodwill and Intangible Assets - We account for business combinations under the acquisition method by assigning the purchase price to tangible and intangible assets acquired and liabilities assumed. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. We consult with third-party valuation advisors in determining the fair value of the acquired assets and liabilities. Acquired intangible assets with finite lives are amortized over their estimated useful lives. Adjustments to fair value assessments are recorded to goodwill over the purchase price allocation period. The determination of the estimated fair value of our acquired intangible assets requires significant judgements and estimates and is most sensitive to future revenue forecasts.
Goodwill and acquired intangible assets with indefinite lives are not amortized. We review goodwill and acquired indefinite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. We also perform an annual impairment test in the fourth quarter of each year. We test goodwill and acquired indefinite-lived intangible assets for impairment between annual tests if events occur or circumstances change that would more likely than not reduce our enterprise fair value below its book value. These events or circumstances could include a significant change in the business climate, including a significant sustained decline
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in an entity’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business, or other factors.
We may use either a qualitative or quantitative approach when testing a reporting unit’s goodwill for impairment. For selected reporting units where we use the qualitative approach, we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise we perform a quantitative impairment test. We perform a quantitative test for each reporting unit at least once every three years.
For goodwill impairment testing using the quantitative approach, we estimate the fair value of the selected reporting units through the use of a discounted cash flow model (an income approach), and earnings multiples (a market approach). The discounted cash flow model is based on our best estimate of amounts and timing of future revenues and cash flows and our most recent business and strategic plans, and requires judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values over a multi-year period. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting units, it is possible a material change could occur. If actual results are not consistent with management’s estimates and assumptions, goodwill may be overstated and a charge would need to be taken against net earnings.
When using a quantitative approach, changes in our projections used in the discounted cash flow model and public company guideline model could affect the estimated fair value of certain of our reporting units and could result in a goodwill impairment charge in a future period. Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions may have a material effect on the results of our impairment analysis.
Intangible assets with finite lives and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of intangible assets with finite lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. Asset groups are determined at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. If these comparisons indicate that an asset is not recoverable, we will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value.
During fiscal year 2026, we had five reporting units for goodwill impairment testing. Quantitative tests were performed for one reporting unit and a qualitative test was performed for the remaining four reporting units. Our analysis for fiscal year 2026 resulted in goodwill impairment charges of $84.8 million for the IoT Connectivity Services reporting unit. There was no goodwill impairment for any of the Company's other reporting units.
During fiscal year 2025, we had six reporting units for goodwill impairment testing. A quantitative test was performed for one reporting unit and a qualitative test was performed for the remaining five reporting units. Our analysis for fiscal year 2025 resulted in goodwill impairment charges of $7.5 million for the IoT Systems–Modules reporting unit. There was no goodwill impairment for any of the Company's other reporting units.
Recent Accounting Pronouncements
Recent accounting pronouncements are discussed in Note 2, Significant Accounting Policies, to our Consolidated Financial Statements.

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk
We are subject to a variety of market risks, including commodity risk and the risks related to foreign currency, interest rates and market performance that are detailed below. Many of the factors that can have an impact on our market risk are external to us, and so we are unable to fully predict them.
Commodity Risk
We are subject to risk from fluctuating market prices of certain commodity raw materials, particularly gold, that are incorporated into our end products or used by our suppliers to process our end products. Increased commodity prices are passed on to us in the form of higher prices from our suppliers, either in the form of general price increases or a commodity surcharge. Although we generally deal with our suppliers on a purchase order basis rather than on a long-term contract basis, we generally attempt to obtain firm pricing for volumes consistent with planned production. Our gross margins may decline if we are not able to increase selling prices of our products or obtain manufacturing efficiencies to offset the increased cost. We do not enter into formal hedging arrangements to mitigate against commodity risk.
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Foreign Currency Risk
Our foreign operations expose us to the risk of fluctuations in foreign currency exchange rates against our functional currencies and we may economically hedge this risk with foreign currency contracts (such as currency forward contracts). Gains or losses on these balances are generally offset by corresponding losses or gains on the related hedging instruments. As of January 25, 2026 , our largest foreign currency exposures were from the Australian Dollar, Canadian Dollar, euro, Great British Pound, Indian Rupee, Mexican Peso, Swiss Franc and Taiwan Dollar.
We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign exchange rates of 10% for all currencies could be experienced in the near-term. These reasonably possible adverse changes were applied to our total monetary assets and liabilities denominated in currencies other than our functional currency as of  January 25, 2026. The adverse impact these changes would have had (after taking into account balance sheet hedges only) on our income before taxes is $2.6 million.
Interest Rate and Credit Risk
While we had no revolving loans outstanding under the Revolving Credit Facility as of January 25, 2026, future borrowing under our Credit Agreement is subject to variable interest rates.
In the first quarter of fiscal year 2024, we entered into an interest rate swap agreement with a 2.75 year term to hedge the variability of interest payments on $150.0 million of debt outstanding on the Term Loans at a Term SOFR rate of 3.58%, plus a variable margin and spread based on our consolidated leverage ratio. This interest rate swap agreement was partially terminated in the second quarter of fiscal year 2026 and fully terminated in the third quarter of fiscal year 2026.
Interest rates also affect our return on excess cash and investments. As of January 25, 2026, we had $195.2 million of cash and cash equivalents. A majority of our cash and cash equivalents generate interest income based on prevailing interest rates. Interest income, net of reserves, generated by our investments and cash and cash equivalents was $2.5 million in fiscal year 2026. A significant change in interest rates would impact the amount of interest income generated from our cash and investments. It would also impact the market value of our investments.
Our investments are primarily subject to credit risk. Our investment guidelines prescribe credit quality, permissible investments, diversification, and duration restrictions. These restrictions are intended to limit risk by restricting our investments to high quality debt instruments with relatively short-term durations. Our investment strategy limits investment of new funds and maturing securities to U.S. Treasury, Federal agency securities, high quality money market funds and time deposits with our principal commercial banks. Outside of these investment guidelines, we also invest in a limited amount of debt securities in privately held companies that we view as strategic to our business. For example, many of these investments are in companies that are enabling the LoRa and LoRaWAN® based ecosystem.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. We maintain cash held in deposit at financial institutions in the U.S. These deposits are insured by the FDIC in an amount up to $250,000 for any depositor. To the extent we hold cash deposits in amounts that exceed the FDIC insurance limitation, we may incur a loss in the event of a failure of any of the financial institutions where we maintain deposits. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a future failure or liquidity crisis. In addition, if any of our partners or parties with whom we conduct business are unable to access funds due to the status of their financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. Management believes we are not exposed to significant risk due to the financial position of the depository institution, but will continue to monitor regularly and adjust, if needed, to mitigate risk. We have established guidelines regarding diversification of our investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, we have not experienced any losses associated with this credit risk and continue to believe that this exposure is not significant.
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Item 8.     Financial Statements and Supplementary Data
The information required by Item 8 is presented in the following order:

Management’s Report on Internal Control Over Financial Reporting
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Reports of Independent Registered Public Accounting Firm: (PCAOB ID No. 34 )

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
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Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
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Consolidated Statements of Operations
58

Consolidated Statements of Comprehensive (Loss) Income
59

Consolidated Balance Sheets
60

Consolidated Statements of Stockholders’ Equity (Deficit)
61

Consolidated Statements of Cash Flows
62

Notes to Consolidated Financial Statements
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Schedule II — Valuation and Qualifying Accounts
115

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to the Report of Management on Internal Control Over Financial Reporting that is included in Part II, Item 9A of this Annual Report on Form 10-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting that is included in Part II, Item 9A of this Annual Report on Form 10-K.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Semtech Corporation
Camarillo, California
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Semtech Corporation and subsidiaries (the "Company") as of January 25, 2026 and January 26, 2025, the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows , for each of the three years in the period ended January 25, 2026, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 25, 2026 and January 26, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 25, 2026, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 25, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 23, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Inventories – Excess Quantities and Obsolescence – Refer to Notes 2 and 5 to the financial statements
Critical Audit Matter Description
The Company maintains an inventory excess and obsolescence ("E&O") reserve to reduce the basis of its inventory due to changes in demand or change in product life cycles. The inventory E&O reserve serves to reduce the Company’s recorded inventory balance to the lower of its cost or net realizable value on a part-by-part basis, if required. In order to determine the inventory E&O reserve, management utilizes projections of inventory demand. The estimation of future inventory demand requires management to evaluate and make assumptions of the impact of changes in demand or changes in product life cycles on current sales levels.
Given the subjectivity of estimating projections of future demand and the recording of inventory E&O reserve, performing audit procedures to evaluate the projections of future demand and to determine the reasonableness of inventory E&O reserve required a high degree of auditor judgment and an increased extent of effort.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the projections of future demand and the inventory E&O reserve included the following, among others:
• We tested the effectiveness of controls over the inventory E&O reserve estimation and approval process, including controls designed to review and approve the related projections of future demand.
• We selected a sample of parts and performed the following for each selection:
◦ To understand the assumptions behind the E&O reserve, including the related projection of future demand, we made inquiries of business unit managers as well as sales, operations, and marketing personnel about the estimated demand and historical consumption of each part selected.
◦ We tested the projection of future demand by comparing internal and external information (e.g., historical sales, communications with customers, market trends, and macroeconomic conditions) with the Company’s projection of future demand.
• We recalculated the net realizable value of inventory and compared our recalculation with the recorded balance.

/s/ Deloitte & Touche LLP
Los Angeles, California
March 23, 2026

We have served as the Company's auditor since 2016.

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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

  Fiscal Year Ended
  January 25, 2026 January 26, 2025 January 28, 2024
Net sales:
Products $ 942,087   $ 794,379   $ 754,018  
Services 107,888   114,908   114,740  
Total net sales 1,049,975   909,287   868,758  
Cost of sales:
Products 448,642   394,268   393,971  
Services 49,996   49,385   53,029  
Amortization of acquired technology 9,193   9,106   33,716  
Acquired technology impairments —   —   91,792  
Total cost of sales 507,831   452,759   572,508  
Gross profit 542,144   456,528   296,250  
Operating expenses, net:
Product development and engineering 196,348   170,908   186,450  
Selling, general and administrative 221,852   222,368   220,220  
Intangible amortization 631   884   14,913  
Restructuring 4,186   4,944   23,775  

Intangible impairments 1,777   —   39,593  
Goodwill impairment 84,785   7,490   755,621  
Total operating expenses, net 509,579   406,594   1,240,572  
Operating income (loss) 32,565   49,934   ( 944,322 )
Interest expense ( 40,618 ) ( 90,067 ) ( 95,813 )
Interest income 2,522   2,302   3,051  
Loss on extinguishment of debt —   ( 144,688 ) —  
Non-operating (expense) income, net ( 5,262 ) 267   ( 542 )
Investment impairments and credit loss reserves, net ( 10,387 ) ( 1,109 ) ( 3,929 )
Loss before taxes and equity method income (loss) ( 21,180 ) ( 183,361 ) ( 1,041,555 )
Provision (benefit) for income taxes 19,832   ( 22,012 ) 50,519  
Net loss before equity method income (loss) ( 41,012 ) ( 161,349 ) ( 1,092,074 )
Equity method income (loss) 636   ( 547 ) 45  
Net loss ( 40,376 ) ( 161,896 ) ( 1,092,029 )
Net income attributable to noncontrolling interest —   —   1  
Net loss attributable to common stockholders $ ( 40,376 ) $ ( 161,896 ) $ ( 1,092,030 )
Loss per share:
Basic $ ( 0.46 ) $ ( 2.26 ) $ ( 17.03 )
Diluted $ ( 0.46 ) $ ( 2.26 ) $ ( 17.03 )
Weighted average number of shares used in computing
loss per share:
Basic 88,374 71,606 64,127
Diluted 88,374 71,606 64,127

The accompanying notes are an integral part of these consolidated financial statements.
58

SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)

   Fiscal Year Ended
  January 25, 2026 January 26, 2025 January 28, 2024
Net loss $ ( 40,376 ) $ ( 161,896 ) $ ( 1,092,029 )
Other comprehensive income (loss), net:
Unrealized gain (loss) on foreign currency cash flow hedges, net 267   ( 142 ) ( 36 )
Reclassifications of realized loss (gain) on foreign currency cash flow hedges, net to net income 122   18   ( 441 )
Unrealized gain on interest rate cash flow hedges, net 635   5,661   13,855  
Reclassifications of realized gain on interest rate cash flow hedges, net to net income ( 494 ) ( 7,477 ) ( 7,998 )
Reclassifications of realized gain on interest rate swaps termination and prior hedge effectiveness ( 1,208 ) ( 3,579 ) —  
Unrealized loss on available-for-sale securities ( 1,631 ) —   —  

Cumulative translation adjustment 5,014   ( 2,773 ) ( 10,834 )
Change in defined benefit plans, net 1,698   ( 794 ) ( 899 )
Other comprehensive income (loss), net 4,403   ( 9,086 ) ( 6,353 )
Comprehensive loss ( 35,973 ) ( 170,982 ) ( 1,098,382 )
Comprehensive income attributable to noncontrolling interest —   —   1  
Comprehensive loss attributable to common stockholders $ ( 35,973 ) $ ( 170,982 ) $ ( 1,098,383 )

The accompanying notes are an integral part of these consolidated financial statements.
59

SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

January 25, 2026 January 26, 2025
Assets
Current assets:
Cash and cash equivalents $ 195,179   $ 151,743  
Accounts receivable, less allowances of $ 7,976 and $ 5,248 , respectively
160,552   162,523  
Inventories 195,737   163,593  
Prepaid taxes 15,422   13,532  
Other current assets 88,230   94,070  
Total current assets 655,120   585,461  
Non-current assets:
Property, plant and equipment, net of accumulated depreciation of $ 340,331 and $ 313,978 , respectively
109,345   126,190  
Deferred tax assets 34,188   41,125  
Goodwill 457,925   533,091  
Other intangible assets, net 40,015   33,111  
Other assets 113,744   100,286  
TOTAL ASSETS $ 1,410,337   $ 1,419,264  
Liabilities
Current liabilities:
Accounts payable $ 84,134   $ 59,239  
Accrued liabilities 191,802   178,201  
Current portion of long-term debt —   45,594  
Total current liabilities 275,936   283,034  
Non-current liabilities:
Deferred tax liabilities 101   750  
Long term debt, less current portion 491,234   505,933  
Other long-term liabilities 93,348   87,121  

Commitments and contingencies (Note 13)

Stockholders’ Equity:
Common stock, $ 0.01 par value, 250,000,000 shares authorized, 104,264,193 issued and 92,668,555 outstanding and 99,010,607 issued and 86,272,439 outstanding, respectively
1,043   990  
Treasury stock, at cost, 11,595,638 shares and 12,738,168 shares, respectively
( 474,376 ) ( 520,511 )
Additional paid-in capital 1,466,789   1,469,712  
Retained deficit ( 436,062 ) ( 395,686 )
Accumulated other comprehensive loss, net ( 7,676 ) ( 12,079 )
Total stockholders’ equity 549,718   542,426  

TOTAL LIABILITIES AND EQUITY $ 1,410,337   $ 1,419,264  

The accompanying notes are an integral part of these consolidated financial statements.
60

SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share data)
Common Stock Accumulated Other Comprehensive Income (Loss), Net
Number of Shares Outstanding Amount Treasury Stock, at Cost Additional Paid-in Capital Retained Earnings (Deficit) Stockholders’ Equity (Deficit) Noncontrolling Interest Total Equity (Deficit)
Balance at January 29, 2023 63,870,581   $ 785   $ ( 577,907 ) $ 471,374   $ 858,240   $ 3,360   $ 755,852   $ 183   $ 756,035  

Net loss —  —  —  —  ( 1,092,030 ) —  ( 1,092,030 ) 1   ( 1,092,029 )
Other comprehensive income —  —  —  —  —  ( 6,353 ) ( 6,353 ) —  ( 6,353 )

Share-based compensation —  —  —  41,811   —  —  41,811   —  41,811  

Treasury stock reissued to settle
share-based awards 545,280   —  21,019   ( 27,733 ) —  —  ( 6,714 ) —  ( 6,714 )

Balance at January 28, 2024 64,415,861   $ 785   $ ( 556,888 ) $ 485,452   $ ( 233,790 ) $ ( 2,993 ) $ ( 307,434 ) $ 184   $ ( 307,250 )

Net loss —  —  —  —  ( 161,896 ) —  ( 161,896 ) —  ( 161,896 )
Other comprehensive income —  —  —  —  —  ( 9,086 ) ( 9,086 ) —  ( 9,086 )
Distribution to outside interest upon liquidation of a consolidated subsidiary —  —  —  —  —  —  —  ( 184 ) ( 184 )

Issuance of common stock upon exchange of 2028 Notes (as defined in Note 9)
10,378,431   100   —  333,155   —  —  333,255   —  333,255  
Issuance of common stock from public offering (see Note 17)
10,496,032   105   —  640,570   —  —  640,675   —  640,675  
Share-based compensation —  —  —  56,603   —  —  56,603   —  56,603  

Treasury stock reissued to settle
share-based awards 982,115   —  36,377   ( 46,068 ) —  —  ( 9,691 ) —  ( 9,691 )

Balance at January 26, 2025 86,272,439   $ 990   $ ( 520,511 ) $ 1,469,712   $ ( 395,686 ) $ ( 12,079 ) $ 542,426   $ —   $ 542,426  
Net loss —  —  —  —  ( 40,376 ) —  ( 40,376 ) —  ( 40,376 )
Other comprehensive loss —  —  —  —  —  4,403   4,403   —  4,403  

Issuance of common stock upon exchange of 2027 Notes and 2028 Notes (as defined in Note 9)
5,253,586   53   —  372,479   —  —  372,532   —  372,532  
Induced conversion of 2027 Notes and 2028 Notes (as defined in Note 9)
—  —  —  ( 355,941 ) —  —  ( 355,941 ) —  ( 355,941 )
Repurchase of Warrants (as defined in Note 9)
—  —  —  ( 217,761 ) —  —  ( 217,761 ) —  ( 217,761 )
Unwind of Convertible Note Hedge (as defined in Note 9)
—  —  —  242,251   —  —  242,251   —  242,251  
Purchase of Capped Calls (as defined in Note 9)
—  —  —  ( 31,395 ) —  —  ( 31,395 ) —  ( 31,395 )

Share-based compensation —  —  —  56,721   —  —  56,721   —  56,721  

Treasury stock reissued to settle
share-based awards 1,142,530   —  46,135   ( 69,277 ) —  —  ( 23,142 ) —  ( 23,142 )
Balance at January 25, 2026 92,668,555   $ 1,043   $ ( 474,376 ) $ 1,466,789   $ ( 436,062 ) $ ( 7,676 ) $ 549,718   $ —   $ 549,718  
The accompanying notes are an integral part of these consolidated financial statements.
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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

  Fiscal Year Ended
  January 25, 2026 January 26, 2025 January 28, 2024
Cash flows from operating activities:
Net loss $ ( 40,376 ) $ ( 161,896 ) $ ( 1,092,029 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 40,807   43,499   77,968  
Amortization of right-of-use assets 5,522   5,872   6,484  
Right-of-use asset impairment —   —   3,884  
Investment impairments and credit loss reserves, net 10,387   1,109   3,929  

Goodwill impairment 84,785   7,490   755,621  
Intangible impairment 1,777   —   131,385  
Accretion of deferred financing costs and debt discount 4,788   8,274   7,320  
Write-off of deferred financing costs and debt discount
2,388   13,246   4,446  
Loss on extinguishment of debt —   143,467   —  
Induced conversion expense 21,188   —   —  
Interest rate swap termination ( 1,145 ) ( 3,579 ) —  
Deferred income taxes 7,874   ( 21,672 ) 40,636  
Share-based compensation 57,723   68,036   40,170  
Loss on disposition of business operations and assets 75   262   8  

Equity method (income) loss ( 636 ) 547   ( 45 )
Gain from sale of investments —   ( 277 ) —  

Corporate-owned life insurance, net 2,917   3,411   4,746  
Amortization of inventory step-up —   —   3,314  

Changes in assets and liabilities:
Accounts receivable, net 3,343   ( 28,348 ) 27,443  
Inventories ( 30,652 ) ( 18,666 ) 57,308  
Other assets ( 12,033 ) 3,137   1,817  
Accounts payable 22,530   14,682   ( 44,346 )
Accrued liabilities 5,011   ( 4,623 ) ( 118,517 )

Other liabilities ( 5,105 ) ( 15,984 ) ( 5,462 )
Net cash provided by (used in) operating activities 181,168   57,987   ( 93,920 )
Cash flows from investing activities:

Proceeds from sales of property, plant and equipment 8   97   410  
Purchase of property, plant and equipment ( 9,783 ) ( 7,861 ) ( 29,185 )

Proceeds from sale of investments 1,936   2,650   —  
Purchase of investments —   ( 434 ) ( 930 )
Purchase of intangibles ( 6,022 ) ( 6,341 ) ( 1,915 )

Acquisition, net of cash acquired ( 21,472 ) —   —  
Proceeds from corporate-owned life insurance —   4,802   8,923  
Premiums paid for corporate-owned life insurance ( 3,428 ) ( 4,800 ) —  
Net cash used in investing activities ( 38,761 ) ( 11,887 ) ( 22,697 )

62

SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)

Fiscal Year Ended
January 25, 2026 January 26, 2025 January 28, 2024
Cash flows from financing activities:
Proceeds from revolving line of credit —   68,250   70,000  
Payments of revolving line of credit —   ( 283,250 ) ( 5,000 )

Payments of term loans ( 181,212 ) ( 441,413 ) ( 272,375 )
Proceeds from convertible senior notes 402,500   —   250,000  
Payments of convertible senior notes ( 280,950 ) —   —  

Repurchase of warrants ( 217,761 ) —   —  
Proceeds from unwind of convertible note hedge 242,251   —   —  
Purchase of capped calls ( 31,395 ) —   —  

Proceeds from issuance of common stock, net of issuance costs —   640,675   —  
Proceeds from interest rate swap termination 295   4,776   —  
Deferred financing costs ( 11,653 ) ( 824 ) ( 25,361 )

Payments for employee share-based compensation payroll taxes ( 27,293 ) ( 14,025 ) ( 6,714 )
Proceeds from exercise of stock options 4,150   4,335   —  

Distributions to noncontrolling interest —   ( 184 ) —  
Net cash (used in) provided by financing activities $ ( 101,068 ) $ ( 21,660 ) $ 10,550  
Effect of foreign exchange rate changes on cash and cash equivalents $ 2,097   $ ( 1,282 ) $ ( 858 )
Net increase (decrease) in cash and cash equivalents 43,436   23,158   ( 106,925 )
Cash and cash equivalents at beginning of period 151,743   128,585   235,510  
Cash and cash equivalents at end of period $ 195,179   $ 151,743   $ 128,585  

Supplemental disclosure of cash flow information:
Interest paid $ 16,306   $ 72,454   $ 83,583  
Income taxes paid $ 4,076   $ 7,979   $ 19,758  

Non-cash investing and financing activities:

Accounts payable related to capital expenditures $ 2,415   $ 183   $ 860  
Accrued deferred financing costs $ —   $ —   $ 828  
Accrued purchase of intangibles $ 2,157   $ 1,600   $ —  
Debt extinguished in exchange for common stock $ —   $ 188,050   $ —  
Conversion of notes into equity $ —   $ —   $ 1,271  
Write-off of deferred financing costs pursuant to induced conversion $ 4,598   $ —   $ —  

63

SEMTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Organization and Basis of Presentation
Semtech Corporation (together with its consolidated subsidiaries, the "Company" or "Semtech") is a leading provider of high-performance semiconductor, Internet of Things ("IoT") systems and cloud connectivity service solutions. The end customers for the Company’s silicon solutions are primarily original equipment manufacturers ("OEMs") that produce and sell technology solutions. The Company’s IoT module, router, gateway and managed connectivity solutions ship to IoT device makers and enterprises to provide IoT connectivity to end devices.
The Company designs, develops, manufactures and markets a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets.
Basis of Presentation
The Company reports results on the basis of 52 and 53 -week periods and ends its fiscal year on the last Sunday in January. Fiscal years 2026, 2025 and 2024 each consisted of 52 weeks. Fiscal year 2027 will consist of 53 weeks.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The Company’s Consolidated Statements of Operations are referred to herein as the "Statements of Operations," the Company’s Consolidated Balance Sheets are referred to herein as the "Balance Sheets" and the Company's Consolidated Statements of Cash Flows are referred to herein as the "Statements of Cash Flows." The Company consolidates entities that are not variable interest entities ("VIEs") when it owns, directly or indirectly, a majority interest in the entity or is otherwise able to control the entity. The Company consolidates VIEs in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, "Consolidation." Entities for which the Company owns an interest, but does not consolidate, are accounted for under the equity method or cost method of accounting as minority investments and are included in "Other Assets" within the Balance Sheets. The ownership interest in a consolidated subsidiary of the Company held by outside parties is included in "Noncontrolling Interest" within the Balance Sheets.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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